Capital International Investors Buys 3,240,190 Shares of Yum! Brands, Inc. $YUM

Key Points

• Capital International Investors increased its Yum! Brands stake by 20% in the fourth quarter, buying 3.24 million shares and bringing its total holding to 19.4 million shares, or about 6.99% of the company.
• Several other large institutional investors also adjusted positions in YUM, and institutions now own 82.37% of the company’s stock, underscoring heavy professional ownership.
• Recent market focus has centered on a potential Pizza Hut exit, with commentary suggesting that a divestiture could improve execution and margins, while analysts remain generally constructive with a consensus Moderate Buy rating and an average price target of $176.17.

Capital International Investors boosted its stake in shares of Yum! Brands, Inc. (NYSE:YUM - Free Report) by 20.0% in the fourth quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 19,419,826 shares of the restaurant operator's stock after buying an additional 3,240,190 shares during the quarter. Capital International Investors owned approximately 6.99% of Yum! Brands worth $2,938,139,000 as of its most recent SEC filing.

A number of other institutional investors and hedge funds also recently added to or reduced their stakes in the stock. Norges Bank acquired a new stake in Yum! Brands in the fourth quarter valued at approximately $706,799,000. Junto Capital Management LP acquired a new stake in Yum! Brands in the third quarter valued at approximately $133,251,000. Balyasny Asset Management L.P. acquired a new stake in Yum! Brands in the third quarter valued at approximately $126,945,000. Vanguard Group Inc. raised its holdings in Yum! Brands by 2.0% in the third quarter. Vanguard Group Inc. now owns 35,242,558 shares of the restaurant operator's stock valued at $5,356,869,000 after acquiring an additional 684,946 shares in the last quarter. Finally, Marshall Wace LLP acquired a new stake in Yum! Brands in the third quarter valued at approximately $86,944,000. Institutional investors own 82.37% of the company's stock.

More Yum! Brands News

Here are the key news stories impacting Yum! Brands this week:

• Positive Sentiment: Reports that Yum Brands is weighing an exit from Pizza Hut are boosting the stock on hopes that divesting the weaker pizza chain could sharpen execution and improve margins. Pizza Hut's future in doubt as Yum Brands weighs exit and surprise company eyes takeover
• Positive Sentiment: Jim Cramer also argued that “a Yum free of Pizza Hut” could trade higher, reinforcing the market’s view that a possible sale would be a value-creating move for YUM. Jim Cramer Believes “A Yum Free of Pizza Hut Is a Yum That’s Going to Trade Much Higher”
• Positive Sentiment: Analyst commentary raised Yum’s fair value estimate and cited stronger KFC and Taco Bell fundamentals, suggesting the stock may still have upside if the Pizza Hut situation is resolved favorably. How The Investment Story Is Shifting For Yum Brands (YUM) After New Targets And Pizza Hut Talks
• Neutral Sentiment: Yum announced that COO and Chief People Officer Tracy Skeans will retire after 25 years, a leadership change that adds some succession-planning focus but is not clearly a major business setback. Yum Brands COO Tracy Skeans stepping down after 25 years with the company
• Neutral Sentiment: Separate coverage repeated the retirement news, keeping the focus on management transition rather than a change in near-term operating results. Yum Brands COO and chief people officer to retire after 25 years with the company

Insider Transactions at Yum! Brands

In related news, CEO Christopher Lee Turner sold 270 shares of the firm's stock in a transaction on Monday, June 1st. The stock was sold at an average price of $148.14, for a total transaction of $39,997.80. Following the transaction, the chief executive officer directly owned 64,282 shares in the company, valued at $9,522,735.48. This trade represents a 0.42% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Scott Mezvinsky sold 277 shares of the firm's stock in a transaction on Friday, May 1st. The stock was sold at an average price of $160.48, for a total value of $44,452.96. Following the transaction, the chief executive officer owned 483 shares in the company, valued at $77,511.84. This trade represents a 36.45% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders have sold 5,895 shares of company stock valued at $906,499. Company insiders own 0.14% of the company's stock.

Wall Street Analyst Weigh In

Several brokerages recently weighed in on YUM. TD Cowen reduced their target price on shares of Yum! Brands from $186.00 to $180.00 and set a "buy" rating on the stock in a report on Wednesday, May 27th. Royal Bank Of Canada restated a "sector perform" rating and set a $165.00 target price on shares of Yum! Brands in a research note on Monday, April 20th. Citigroup boosted their target price on Yum! Brands from $174.00 to $175.00 and gave the stock a "neutral" rating in a research note on Thursday, April 30th. Guggenheim restated a "buy" rating and set a $180.00 target price on shares of Yum! Brands in a research note on Thursday, February 12th. Finally, Deutsche Bank Aktiengesellschaft set a $177.00 price objective on shares of Yum! Brands in a report on Thursday, April 30th. Thirteen analysts have rated the stock with a Buy rating and seven have assigned a Hold rating to the company's stock. Based on data from MarketBeat, Yum! Brands currently has a consensus rating of "Moderate Buy" and an average price target of $176.17.

Yum! Brands Stock Performance

YUM opened at $150.78 on Friday. The company's 50 day simple moving average is $155.32 and its 200 day simple moving average is $155.60. Yum! Brands, Inc. has a 1 year low of $137.33 and a 1 year high of $169.39. The stock has a market capitalization of $41.56 billion, a PE ratio of 24.32, a P/E/G ratio of 1.92 and a beta of 0.57.

Yum! Brands (NYSE:YUM - Get Free Report) last posted its earnings results on Wednesday, April 29th. The restaurant operator reported $1.50 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.39 by $0.11. Yum! Brands had a net margin of 20.48% and a negative return on equity of 23.51%. The firm had revenue of $2.06 billion during the quarter, compared to the consensus estimate of $2.04 billion. During the same quarter in the prior year, the company earned $1.30 EPS. The company's revenue was up 15.2% on a year-over-year basis. As a group, sell-side analysts expect that Yum! Brands, Inc. will post 6.78 earnings per share for the current fiscal year.

Yum! Brands Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, June 12th. Investors of record on Wednesday, May 27th will be paid a dividend of $0.75 per share. The ex-dividend date is Wednesday, May 27th. This represents a $3.00 annualized dividend and a yield of 2.0%. Yum! Brands's dividend payout ratio (DPR) is 48.39%.

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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