Louisville, Kentucky-based Yum! Brands, Inc. (YUM) develops, operates, franchises, and licenses quick service restaurants. Valued at $41 billion by market cap, the company prepares, packages, and sells a menu of food items.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and YUM perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the restaurants industry. YUM's massive global footprint with 62,000+ restaurants in 155+ countries, featuring iconic brands KFC, Pizza Hut, and Taco Bell. Its franchising model drives consistent revenue and minimizes risks.
Despite its notable strength, YUM slipped 9.1% from its 52-week high of $163.30, achieved on Mar. 7. Over the past three months, YUM stock gained 2.8%, underperforming the Nasdaq Composite’s ($NASX) 9.1% gains during the same time frame.
In the longer term, shares of YUM rose 3.2% on a six-month basis and climbed 7.8% over the past 52 weeks, underperforming NASX’s six-month gains of 20.9% and 20.4% returns over the last year.
To confirm the bullish trend, YUM has been trading above its 50-day moving average since late June, with some fluctuations. The stock has been trading above its 200-day moving average since early February, experiencing small fluctuations.
YUM's underperformance is primarily attributed to Pizza Hut's challenges posed by Domino's Pizza, Inc.’s (DPZ) aggressive delivery strategy. The ongoing strategic review may lead to a more streamlined and capital-efficient Yum! Brands. Moreover, excluding Pizza Hut's weakness, the company's performance has been robust.
On Nov. 4, YUM shares closed up more than 7% after reporting its Q3 results. The company’s adjusted EPS of $1.58 beat Wall Street expectations of $1.47. The company’s revenue was $1.98 billion, beating Wall Street's $1.96 billion forecast.
YUM’s rival, Chipotle Mexican Grill, Inc. (CMG) shares lagged behind the stock, with a 32.2% downtick on a six-month basis and 44.3% losses over the past 52 weeks.
Wall Street analysts are reasonably bullish on YUM’s prospects. The stock has a consensus “Moderate Buy” rating from the 28 analysts covering it, and the mean price target of $164.88 suggests a potential upside of 11% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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