Market Overview

Yum Brands' Better Business Model

Share:
Yum Brands' Better Business Model

Recapping Yum! Brands, Inc. (NYSE: YUM)'s Investor Day, Baird said it believes the company is transitioning to a leaner and much more capital efficient growth model following the upcoming spinoff of its China division.

Measures To Transition To Attractive Business Model

Analyst David Tarantino noted that the company intends to increase the franchise mix for Yum, excluding China, to 98 percent by the end of 2018 from about 93 percent post the spinoff. Among the other measures are creating a leaner G&A structure and reduced capex spending, the analyst noted.

Financial Metrics Target

Baird expects the company to return substantial amount of cash to shareholders, achieve earnings per share of $3.75+ in 2019 and accelerate annual system sales growth. Accordingly, the firm sees annual EBIT up in high-single-digits and shareholder returns in the mid-teens.

Related Link: Yum Brands: The Transformation

Yum China Growth Outlook Positive

Baird is positive on the longer-term outlook for Yum China, although it is concerned about the near term visibility on same store sales.

Waiting For Better Entry Point

Given concerns about the valuation for the China business, Baird prefers to wait for a better entry point before adopting a more constructive stance on the combined business. Baird remains at Neutral on Yum but lifted its price target to $95 from $92.

At last check, Yum was trading up 1.14 percent at $89.28.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for YUM

DateFirmActionFromTo
Oct 2019MaintainsNeutral
Oct 2019MaintainsHold
Oct 2019MaintainsMarket Perform

View More Analyst Ratings for YUM
View the Latest Analyst Ratings

Posted-In: Analyst Color News Price Target Reiteration Restaurants Stock Split Events Analyst Ratings Best of Benzinga

 

Related Articles (YUM)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Overdone Concerns Around Global Payments' Organic Growth Weighing On The Stock

Theravance Biopharma's Valuation Has Gotten A Little Carried Away