Yum! Brands (NYSE:YUM) Lowered to "Strong Sell" Rating by Zacks Research

Key Points

• Zacks Research downgraded Yum! Brands to “Strong Sell” from “Hold,” despite the broader analyst consensus remaining “Moderate Buy” with an average price target of $174.65.
• Yum! Brands reported quarterly EPS of $1.62, exceeding estimates of $1.58, while revenue rose 12.2% year over year to $2.17 billion, slightly below expectations.
• The company authorized a $4 billion share-repurchase program, allowing it to buy back up to 9.4% of outstanding shares; institutional investors own 82.37% of the stock.

Yum! Brands (NYSE:YUM - Get Free Report) was downgraded by research analysts at Zacks Research from a "hold" rating to a "strong sell" rating in a research report issued to clients and investors on Monday,Zacks.com reports.

YUM has been the topic of a number of other research reports. Argus cut their price target on Yum! Brands from $185.00 to $180.00 and set a "buy" rating on the stock in a report on Monday, August 17th. Wells Fargo & Company raised their target price on Yum! Brands from $160.00 to $165.00 and gave the company an "equal weight" rating in a research report on Thursday, April 30th. Morgan Stanley upgraded Yum! Brands from an "equal weight" rating to an "overweight" rating and boosted their price target for the stock from $180.00 to $185.00 in a research report on Wednesday, June 3rd. Evercore reissued an "outperform" rating on shares of Yum! Brands in a report on Tuesday, June 16th. Finally, TD Cowen restated a "buy" rating and set a $180.00 price objective on shares of Yum! Brands in a research note on Tuesday, June 16th. One analyst has rated the stock with a Strong Buy rating, twelve have given a Buy rating, seven have issued a Hold rating and one has given a Sell rating to the stock. According to data from MarketBeat, the company presently has a consensus rating of "Moderate Buy" and an average price target of $174.65.

Yum! Brands Stock Down 0.5%

YUM opened at $156.55 on Monday. The company's 50-day moving average price is $153.46 and its 200 day moving average price is $155.95. Yum! Brands has a fifty-two week low of $137.33 and a fifty-two week high of $170.14. The firm has a market cap of $42.72 billion, a price-to-earnings ratio of 19.69, a price-to-earnings-growth ratio of 2.55 and a beta of 0.55.

Yum! Brands (NYSE:YUM - Get Free Report) last released its quarterly earnings data on Thursday, July 30th. The restaurant operator reported $1.62 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $1.58 by $0.04. Yum! Brands had a negative return on equity of 24.57% and a net margin of 25.42%.The business had revenue of $2.17 billion during the quarter, compared to analyst estimates of $2.18 billion. During the same quarter in the previous year, the firm posted $1.44 EPS. The business's revenue for the quarter was up 12.2% compared to the same quarter last year. Research analysts anticipate that Yum! Brands will post 6.42 earnings per share for the current year.

Yum! Brands announced that its board has authorized a share repurchase program on Tuesday, June 16th that permits the company to repurchase $4.00 billion in shares. This repurchase authorization permits the restaurant operator to purchase up to 9.4% of its stock through open market purchases. Stock repurchase programs are typically a sign that the company's board of directors believes its stock is undervalued.

Insider Activity at Yum! Brands

In other news, CEO Scott Mezvinsky sold 277 shares of the business's stock in a transaction on Wednesday, July 1st. The stock was sold at an average price of $160.42, for a total value of $44,436.34. Following the sale, the chief executive officer owned 483 shares of the company's stock, valued at approximately $77,482.86. The trade was a 36.45% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, VP David Eric Russell sold 7,961 shares of the company's stock in a transaction on Monday, August 3rd. The shares were sold at an average price of $153.15, for a total value of $1,219,227.15. Following the completion of the sale, the vice president owned 11,960 shares of the company's stock, valued at approximately $1,831,674. This trade represents a 39.96% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 19,043 shares of company stock worth $2,978,180 in the last quarter. Company insiders own 0.14% of the company's stock.

Institutional Trading of Yum! Brands

Several institutional investors and hedge funds have recently added to or reduced their stakes in the business. California State Teachers Retirement System grew its position in Yum! Brands by 15,378.9% in the second quarter. California State Teachers Retirement System now owns 70,142,092 shares of the restaurant operator's stock worth $11,212,915,000 after buying an additional 69,688,945 shares during the last quarter. BlackRock Inc. acquired a new stake in shares of Yum! Brands during the 2nd quarter valued at $4,186,811,000. Norges Bank bought a new stake in shares of Yum! Brands during the 4th quarter worth $706,799,000. Wellington Management Group LLP boosted its stake in shares of Yum! Brands by 1,373.2% during the 2nd quarter. Wellington Management Group LLP now owns 4,631,940 shares of the restaurant operator's stock worth $740,462,000 after acquiring an additional 4,317,526 shares in the last quarter. Finally, Bank of America Corp DE acquired a new position in shares of Yum! Brands in the 2nd quarter worth $638,589,000. 82.37% of the stock is owned by institutional investors and hedge funds.

Yum! Brands Company Profile

Yum! Brands, Inc NYSE: YUM is a global quick-service restaurant company that develops, operates and franchises a portfolio of well-known restaurant brands. The company's principal brands are KFC, Pizza Hut and Taco Bell, each focused on distinct product categories—KFC on fried chicken and related menu items, Pizza Hut on pizza and complementary offerings, and Taco Bell on Mexican-inspired quick-service food. Yum! is headquartered in Louisville, Kentucky and was formed as Tricon Global Restaurants in 1997 when PepsiCo spun off its restaurant businesses, later adopting the Yum! Brands name.

The company's operating model centers on brand development, system growth and franchising; a large portion of its restaurants are operated by independent franchisees, and Yum! generates revenue through franchise royalties and fees in addition to sales from company-operated locations.

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