Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
-- Yum Brands
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 9.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- YUM BRANDS INC has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, YUM BRANDS INC increased its bottom line by earning $2.74 versus $2.39 in the prior year. This year, the market expects an improvement in earnings ($3.26 versus $2.74).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 23.0% when compared to the same quarter one year prior, going from $383.00 million to $471.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, YUM BRANDS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
YUM! Brands, Inc., together with its subsidiaries, operates quick service restaurants in the United States and internationally. Yum has a market cap of $30.51 billion and is part of the services sector and leisure industry. The company has a P/E ratio of 20, above the S&P 500 P/E ratio of 17.7. Shares are up 14.6% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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