Market Overview

Yum Brands Upgraded On Yum China Spinoff, Refranchising Success

Share:
Yum Brands Upgraded On Yum China Spinoff, Refranchising Success

Premised on the transformation of Yum! Brands, Inc. (NYSE: YUM)'s business through refranchising, Argus upgraded the shares of the company on Tuesday.

Refranchising In The Works

Analyst John Staszak noted that the company plans to raise the percentage of franchised restaurants to 98 percent by 2018 from 93 percent currently. Additionally, the company looks to scale down capital spending to $100 million, annually, from $422 million in 2016, and reduce annual G&A expense by $300 million, the analyst added.

Management Goals Achievable

Pointing to the management's target of achieving earnings per share of $3.75 by 2019 and delivering average annual returns of 15 percent over the next two years, Argus said it expects the company to reach those goals through continued refranchising and cost-cutting. The firm expects at least mid-teens earnings per share growth in 2017 and 2018.

Above-Consensus On Twin Factors

Reflecting the spinoff of Yum China Holdings Inc (NYSE: YUMC) and the benefits of accelerated refranchising, the firm expects 2017 earnings per share of $2.80 and 2018 earnings per share of $3.20. The firm noted that both estimates were above the consensus estimates.

As such, Argus upgraded the shares of the company to Buy from Hold and it set a price target of $80.

At last check, Yum China shares were up 3.2 percent at $34.88, while Yum Brands remained flattish at $69.34.

Related Links:

The Real Winner Of The Kentucky Derby

Whet Your Restaurant Sector Appetite: A 2017 Outlook
_______
Image Credit: By Jwhalin - Own work, Public Domain, via Wikimedia Commons

Latest Ratings for YUM

DateFirmActionFromTo
Mar 2020Morgan StanleyMaintainsOverweight
Feb 2020Deutsche BankInitiates Coverage OnHold
Feb 2020Wells FargoMaintainsEqual-Weight

View More Analyst Ratings for YUM
View the Latest Analyst Ratings

 

Related Articles (YUM + YUMC)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas News Emerging Markets Upgrades Price Target Restaurants Markets Best of Benzinga

Latest Ratings

StockFirmActionPT
XPOJP MorganMaintains84.0
UPSJP MorganMaintains113.0
UNPJP MorganMaintains163.0
NSCJP MorganMaintains189.0
MCHPJP MorganMaintains100.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
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.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
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