Yum Brands Inc

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YUM : NYSE : Services
$74.29 -0.45 | -0.6%
Today's Range: 74.37 - 74.965
Avg. Daily Volume: 2576100.0
06/27/17 - 12:57 PM ET

Financial Analysis


YUM BRANDS INC's gross profit margin for the first quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. YUM BRANDS INC has weak liquidity. Currently, the Quick Ratio is 0.60 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 3,825.64% 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 Q1 FY17 Q1 FY16
Net Sales ($mil)1417.01443.0
EBITDA ($mil)560.0425.0
EBIT ($mil)490.0352.0
Net Income ($mil)280.0364.0


Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)579.0934.0
Total Assets ($mil)5151.08221.0
Total Debt ($mil)9108.04831.0
Equity ($mil)-5812.0156.0


Profitability Q1 FY17 Q1 FY16
Gross Profit Margin51.4549.27
EBITDA Margin39.5229.45
Operating Margin34.5824.39
Sales Turnover1.231.45
Return on Assets30.2615.75
Return on Equity0.0741.66
Debt Q1 FY17 Q1 FY16
Current Ratio0.820.42
Debt/Capital2.760.97
Interest Expense103.042.0
Interest Coverage4.768.38


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)350.0407.0
Div / share0.30.46
EPS0.770.54
Book value / share-16.610.38
Institutional Own % n/a n/a
Avg Daily Volume2540743.02447208.0

Valuation


HOLD. The current P/E ratio indicates a significant discount compared to an average of 38.52 for the Hotels, Restaurants & Leisure industry and a value on par with the S&P 500 average of 25.75. 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 price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of 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 26.72 Peers 38.52   YUM 15.12 Peers 19.75

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

YUM is trading at a significant discount to its peers.

 

Discount. 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 discount 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 23.63 Peers 25.90   YUM 2.14 Peers 1.73

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.

 

Premium. 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 premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
YUM NM Peers 10.91   YUM 5.28 Peers 109.06

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.

 

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

However, YUM is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
YUM 4.12 Peers 3.49   YUM -46.93 Peers 3.97

Premium. 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 premium to 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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