YUM - Embedded Expectations Analysis - 2020 07 13
Yum! Brands, Inc. (YUM:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 26.0x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about their ability to assist franchisees, growing costs, and KFC division performanceSpecifically, management may have concerns about their growing bad debt expense, their franchisees' financial health, and their cash burn rate from assisting franchisees. Furthermore, they may be exaggerating their ability to assist franchisees in their capital needs and the potential of their new KFC deal offerings. Moreover, management may lack confidence in their ability to improve their KFC division's performance outside of China, safely offer convenient and affordable food, and continue refining their practices based on consumer feedback and health guidelines. Finally, they may have concerns about the costs of non-working labor in their 1,200 company-owned restaurants and the impact of temporary store closures
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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