Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified Yum Brands ( YUM) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Yum Brands as such a stock due to the following factors:
- YUM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $256.0 million.
- YUM has traded 112,160 shares today.
- YUM is trading at 26.51 times the normal volume for the stock at this time of day.
- YUM crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend. EXCLUSIVE OFFER: Get the inside scoop on opportunities in YUM with the Ticky from Trade-Ideas. See the FREE profile for YUM NOW at Trade-Ideas More details on YUM: YUM! Brands, Inc., together with its subsidiaries, operates quick service restaurants in the United States and internationally. It operates in six segments: YUM Restaurants China, YUM Restaurants International, Taco Bell U.S., KFC U.S., Pizza Hut U.S., and YUM Restaurants India. The stock currently has a dividend yield of 2%. YUM has a PE ratio of 30.2. Currently there are 9 analysts that rate Yum Brands a buy, no analysts rate it a sell, and 12 rate it a hold. The average volume for Yum Brands has been 3.2 million shares per day over the past 30 days. Yum has a market cap of $32.1 billion and is part of the services sector and leisure industry. The stock has a beta of 0.52 and a short float of 1.6% with 2.01 days to cover. Shares are down 5.9% year-to-date as of the close of trading on Tuesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Yum Brands as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- YUM, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- YUM BRANDS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, YUM BRANDS INC increased its bottom line by earning $3.37 versus $2.74 in the prior year. For the next year, the market is expecting a contraction of 13.9% in earnings ($2.90 versus $3.37).
- The gross profit margin for YUM BRANDS INC is currently lower than what is desirable, coming in at 33.15%. YUM has continued with the weak profit margin when compared to the same quarter of last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.38% trails the industry average.
- You can view the full Yum Brands Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.