YUM - Embedded Expectations Analysis - 2020 01 09
Yum! Brands, Inc. (YUM:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 25.1x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management has concerns about Taco Bell International development, franchisee transitions, and KFC unit and sales growthSpecifically, management may be concerned about the pace of their Taco Bell International development, and they may lack confidence in their ability to transition stores to more committed and capable franchisees. Moreover, they may be exaggerating the quality of their technology teams, the potential of their Grubhub and QuikOrder transactions, and their ability to sustain KFC new unit and same-store sales growth, particularly in Eastern Europe. Lastly, they may be concerned about their plant-based meat alternative test launches and about their ability to improve communication for their Recipe for Good initiative
Yum! Brands franchises or operates a system of quick service restaurants through its KFC, Pizza Hut and Taco Bell brands. The company's operating segments consist of the KFC Division, the Pizza Hut Division and the Taco Bell Division. KFC restaurants provides fried and non-fried chicken products such as sandwiches, chicken strips, chicken-on-the-bone and other chicken products marketed under a variety of names. Pizza Hut is engaged in the sale of ready-to-eat pizza products. Pizza Hut operates in the delivery, carryout and casual dining segments. Taco Bell is engaged in Mexican-style food products, including various types of tacos, burritos, quesadillas, salads, nachos and other related items.
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