NEW YORK (TheStreet) -- Yum! Brands (YUM) - Get Yum! Brands, Inc. (YUM) Report stock is falling 3.76% to $80.44 on heavy trading volume on Wednesday morning, after the Chinese currency was devalued on Tuesday.
The yuan slid 3.5% in China and 4.8% in global markets over the last two days, Reuters reports.
China devalued the yuan to help exports, which fell 8.3% in July, but the move will hurt foreign companies, such as Yum! Brands.
Nearly half of the company's revenue comes from China, where it has about 6,853 locations.
Yum! Brands reported on July 14 a year-over-year 4% decrease in revenue from China to $1.6 billion, while same store sales fell 10% for the 2015 second quarter.
The company said it expected better results from China in the second quarter of this year.
Louisville, Ky.-based Yum! Brands is the parent company of KFC, Pizza Hut and Taco Bell.
Separately, TheStreet Ratings team rates YUM BRANDS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate YUM BRANDS INC (YUM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
- Compared to its closing price of one year ago, YUM's share price has jumped by 25.38%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.4%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- YUM BRANDS INC's earnings per share declined by 27.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, YUM BRANDS INC reported lower earnings of $2.29 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($3.52 versus $2.29).
- The gross profit margin for YUM BRANDS INC is currently lower than what is desirable, coming in at 33.62%. Regardless of YUM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.56% trails the industry average.
- You can view the full analysis from the report here: YUM Ratings Report