Here’s Why Yum! Brands (YUM) Stock Closed Lower Today
NEW YORK (TheStreet) -- Yum! Brands (YUM) - Get Report stock closed down 0.59% to $79.60 on heavy trading volume on Friday afternoon after reports suggested a group of investors ended talks to acquire a stake in the company's China unit, which will be spun off by the end of the year.
The consortium, which included China Investment Corp. and KKR (KKR), was seeking a majority stake in the business that operates 7,205 restaurants in China, Reuters reports.
Louisville, KY-based Yum! could not allow the group to have majority control because of the negative tax implications, sources told Reuters. The investors were also concerned about the unit's financial health as Chinese economic growth decelerates.
Additionally, the company's board approved a $4.2 billion share buyback plan as part of Yum! goal of returning $6.2 billion in capital to shareholders before the spin-off of the Chinese unit.
By the end of the trading day, 5.4 million shares of Yum! had been traded compared with its average daily volume of 3.1 million shares.
Separately, Yum! Brands has a "hold" rating and a letter grade of C+ at TheStreet Ratings because of the company's growth in earnings per share, notable return on equity and expanding profit margins, which offsets generally higher debt management risk and disappointing stock performance.
You can view the full analysis from the report here: YUM
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
