Yum! Brands (NYSE:YUM) Stock Sees Heavy Call Option Buying

Key Points

• Yum! Brands saw unusually heavy call-option activity: Traders purchased 3,322 call options, 275% above the typical volume of 886 contracts.
• YUM shares fell 0.6% to $149.87, despite quarterly EPS of $1.62 beating estimates and revenue rising 12.2% year over year to $2.17 billion. The company maintains a $0.75 quarterly dividend, equal to a 2.0% yield.
• Analysts have a “Moderate Buy” consensus rating with an average price target of $172.56, while institutional investors own 82.37% of the stock and insiders have recently reported share sales.

Yum! Brands, Inc. (NYSE:YUM - Get Free Report) was the recipient of unusually large options trading on Friday. Stock traders acquired 3,322 call options on the stock. This represents an increase of 275% compared to the typical volume of 886 call options.

Yum! Brands Trading Down 0.6%

YUM stock traded down $0.96 during trading on Friday, hitting $149.87. The company had a trading volume of 790,019 shares, compared to its average volume of 2,163,312. The business has a 50-day moving average of $145.49 and a 200-day moving average of $151.60. Yum! Brands has a one year low of $134.26 and a one year high of $170.14. The stock has a market cap of $40.90 billion, a PE ratio of 18.84, a PEG ratio of 2.34 and a beta of 0.55.

Yum! Brands (NYSE:YUM - Get Free Report) last issued its quarterly earnings results on Thursday, July 30th. The restaurant operator reported $1.62 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.58 by $0.04. Yum! Brands had a net margin of 25.42% and a negative return on equity of 24.57%. The firm had revenue of $2.17 billion for the quarter, compared to the consensus estimate of $2.18 billion. During the same quarter in the previous year, the company earned $1.44 EPS. The company's revenue for the quarter was up 12.2% on a year-over-year basis. Research analysts forecast that Yum! Brands will post 6.46 EPS for the current year.

Yum! Brands Dividend Announcement

The firm also recently disclosed a quarterly dividend, which was paid on Friday, September 18th. Stockholders of record on Wednesday, September 9th were given a $0.75 dividend. The ex-dividend date of this dividend was Wednesday, September 9th. This represents a $3.00 annualized dividend and a dividend yield of 2.0%. Yum! Brands's dividend payout ratio (DPR) is 37.74%.

Analyst Ratings Changes

A number of research firms have recently commented on YUM. Guggenheim dropped their target price on shares of Yum! Brands from $180.00 to $155.00 and set a "buy" rating for the company in a report on Tuesday, October 6th. JPMorgan Chase & Co. lowered their price target on shares of Yum! Brands from $160.00 to $150.00 and set an "overweight" rating for the company in a report on Tuesday, September 29th. Royal Bank Of Canada increased their price target on Yum! Brands from $165.00 to $170.00 and gave the company a "sector perform" rating in a research note on Friday, July 31st. TD Cowen cut their price objective on Yum! Brands from $180.00 to $177.00 and set a "buy" rating on the stock in a report on Wednesday, October 7th. Finally, Citigroup upped their target price on Yum! Brands from $175.00 to $178.00 and gave the stock a "neutral" rating in a report on Sunday, July 12th. Thirteen investment analysts have rated the stock with a Buy rating and eight have issued a Hold rating to the company. According to data from MarketBeat.com, the company presently has an average rating of "Moderate Buy" and an average price target of $172.56.

Insiders Place Their Bets

In related news, CEO Christopher Turner sold 285 shares of the company's stock in a transaction on Wednesday, October 7th. The stock was sold at an average price of $140.11, for a total transaction of $39,931.35. Following the completion of the sale, the chief executive officer directly owned 63,225 shares in the company, valued at $8,858,454.75. This represents a 0.45% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, COO Tracy Skeans sold 3,494 shares of the firm's stock in a transaction dated Monday, August 24th. The shares were sold at an average price of $158.00, for a total value of $552,052.00. Following the completion of the sale, the chief operating officer directly owned 3 shares in the company, valued at $474. This trade represents a 99.91% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders sold 12,778 shares of company stock worth $1,966,393. 0.14% of the stock is owned by company insiders.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently made changes to their positions in the business. BlackRock Inc. bought a new stake in Yum! Brands in the second quarter worth approximately $4,186,811,000. Wellington Management Group LLP increased its stake in shares of Yum! Brands by 1,373.2% in the 2nd quarter. Wellington Management Group LLP now owns 4,631,940 shares of the restaurant operator's stock valued at $740,462,000 after acquiring an additional 4,317,526 shares in the last quarter. Bank of America Corp DE bought a new stake in shares of Yum! Brands in the 2nd quarter valued at $638,589,000. Legal & General Group Plc bought a new stake in shares of Yum! Brands in the 2nd quarter valued at $297,591,000. Finally, Bank of New York Mellon Corp acquired a new position in shares of Yum! Brands during the 2nd quarter valued at $279,432,000. 82.37% of the stock is owned by institutional investors and hedge funds.

Yum! Brands Company Profile

Yum! Brands, Inc is a global restaurant company that develops, operates, and franchises quick-service restaurants. Its portfolio includes KFC, which specializes in fried and cooked chicken; Taco Bell, known for Mexican-inspired food; Pizza Hut, which offers pizza and related products; and The Habit Burger Grill, a fast-casual chain focused on chargrilled burgers, sandwiches, salads, and shakes.

The company primarily uses a franchised business model, working with franchisees and licensees to operate restaurants in more than 150 countries and territories.

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