Yum Brands Inc

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YUM : NYSE : Services
$90.04 up 0.32 | 0.36%
Today's Range: 89.62 - 89.99
Avg. Daily Volume: 3,022,200
07/28/16 - 11:47 AM ET

Financial Analysis


YUM BRANDS INC's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased. YUM BRANDS INC has weak liquidity. Currently, the Quick Ratio is 0.52 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year.

At the same time, stockholders' equity ("net worth") has significantly decreased by 124.79% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)3008.03105.0
EBITDA ($mil)606.0628.0
EBIT ($mil)428.0441.0
Net Income ($mil)339.0235.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)795.0636.0
Total Assets ($mil)8184.08294.0
Total Debt ($mil)5363.03399.0
Equity ($mil)-389.01569.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin34.5733.62
EBITDA Margin20.1420.22
Operating Margin14.2314.2
Sales Turnover1.591.58
Return on Assets17.4211.03
Return on Equity0.058.31
Debt Q2 FY16 Q2 FY15
Current Ratio0.820.64
Debt/Capital1.080.68
Interest Expense40.033.0
Interest Coverage10.713.36


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)399.0432.0
Div / share0.460.41
EPS0.810.53
Book value / share-0.973.63
Institutional Own % n/a n/a
Avg Daily Volume2938425.04023187.0

Valuation


HOLD. YUM BRANDS INC's P/E ratio indicates a discount compared to an average of 28.27 for the Hotels, Restaurants & Leisure industry and a value on par with the S&P 500 average of 25.05. Normally, for additional comaprison, we would look at the price-to-book ratio; however, this company's price-to-book ratio is negative making the value useless for comparisons. The current price-to-sales ratio is well above the S&P 500 average, but below the industry average. After reviewing these and other key valuation criteria, YUM BRANDS INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
YUM 26.48 Peers 28.27   YUM 17.08 Peers 13.95

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

YUM is trading at a valuation on par with its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

YUM is trading at a premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
YUM 20.93 Peers 24.99   YUM 1.00 Peers 2.68

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

YUM is trading at a valuation on par with its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

YUM trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
YUM NM Peers 11.48   YUM 63.54 Peers 18.32

Neutral. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

YUM's P/B is negative making this valuation measure meaningless.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

YUM is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
YUM 2.70 Peers 2.92   YUM -0.56 Peers 8.46

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

YUM is trading at a valuation on par with its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

YUM significantly trails its peers on the basis of sales growth

 

 

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