Yum! Brands (NYSE:YUM) had its price target dropped by research analysts at Barclays from $82.00 to $73.00 in a note issued to investors on Wednesday, Analyst Ratings.Net reports.
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But with the Chinese economy not doing so well, where the company gets 54% of its sale, Yum Brands stock crashed almost 18% on Wednesday. However, we’re experiencing unpredictable headwinds, making the second half of the year more challenging than we anticipated.
Such challenges could undermine Yum’s ambitions in India, where it has roughly 800 restaurants and aims to have a few 2,000 within the next five to seven years. The country accounts for over 50% of the company’s revenue and profits.
The latest results suggest that Yum’s problems are also tied to the state of the economy, said Jennifer Bartashus, an analyst at Bloomberg Intelligence.
During the same period past year, the firm earned $0.87 earnings per share. But for now, given this quarterly miss and the market’s general impatience, it’s no surprise that Yum!
China Division system sales raised 8%, driven by 7% unit growth and 2% same-store sales growth. Following the transaction, the senior vice president now directly owns 22,131 shares of the company’s stock, valued at $1,719,136.08.
The company’s stock was trading at $67.95 per share, down by 18.68% around 7:36 PM in New York. The business had revenue of $3.43 billion for the quarter. Yum! Brands’s revenue was up 2.2% compared to the same quarter previous year. Yum Brands plunged after cutting its profit forecast for the year, citing weakness in China.
Management expects full-year comps in China in the low single-digit negative range. Brands, Inc. (NYSE:YUM) shares and they have become one among the top shareholders. In a frustrating release, low China trends were out-of-sync with management’s “significantly positive” disclosure at quarter’s end and earnings-per-share guidance was reduced. Taco Bell saw a 1.4-percentage-point increase, while KFC’s margins were up 0.6 percentage points. The Standard & Poor’s 500 index was up four points, or 0.2 percent, to 1,984 and the Nasdaq composite rose three points, or 0.1 percent, to 4,751. But he did say the company would delve into more detail in its earnings conference call tomorrow morning. “In addition, we believe a fully separate, standalone Taco Bell would have opportunities to be managed well (standalone brands don’t have to compete with other brands for a parent company’s resources)”.
“China has been a big portion of their growth story, and that’s set to continue”, he said.
Yum has witnessed declining sales since the last quarter of 2012, hence analyst are not positive about its recovery in the near-term.
However, as this quarter’s results indicate, despite the plodding pace at which it’s occurring, China is gradually warming up to the company’s restaurants again.
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A few better-ranked stocks in the same sector are BJ’s Restaurants, Inc.
