TOKYO (AP) – Asian stock markets and oil prices rose Wednesday, taking in stride the IMF’s lower global growth forecast and Japan’s central bank leaving monetary policy unchanged.
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Shares of Yum! Brands (NYSE:YUM) traded down 0.52% during mid-day trading on Wednesday, hitting $67.36.
Foreign currency translation negatively influenced operating profit by $29 million. Brands, stated results for the third quarter ended September 5, 2015, counting EPS of $1.00, not taking into account Special Items.
The results are the opposite of those seen by Nike, with footwear sales up by an impressive 36%. Yum’s China same store sales rose by just 2% year-over-year, while total China sales increased by 8% year over year. However, the pace of recovery in our China division is below our expectations.
Comparable-store sales gained 3% at KFC and 1% at Pizza Hut. Although Yum’s updated guidance calls for mid-single-digit fourth-quarter growth, including positive comps at KFC and negative comps at Pizza Hut Casual Dining, management comments regarding “unexpected headwinds” in China cast a shadow on near-term expectations. Its Indian Division system sales declined 9%.
The stock price of Yum Brands has surged 16.95% over the last 200 days, and is in powerful up trend.
Overall, Yum’s results were disappointing.
Credit Suisse had stated earlier that the company will have to eventually slow down its store growth in China to fix the business. They fell 18% in India, where Yum has about 800 locations. But that’s not going to have a major impact on Yum’s valuation, considering that it generates less than 1% of its revenues from India.
It’s all about the uncertainty of whether China’s macroeconomic environment would become conducive for Yum Brands. But this still doesn’t justify the poor same-store sales growth.
If Yum! Brands, Inc.
“Yum also still seems focused on keeping the current corporate structure and leverage position, rather than pursuing radical change, such as a spin”, he said. Of all companies tracked, Yum! On top of this, the company has also said that it is facing severe competition from online ordering aggregators that are delivering from small local outlets, and which are “in a death battle for supremacy with heavy discounting”. Brands has taken steps to improve its Chinese sales this year.
Comps at Pizza Hut (excluding China and India) increased 1% comparing favorably with flat comps in the prior quarter, and a 1% decline in the year-ago quarter.
The world’s biggest brewer Anheuser-Busch InBev on Wednesday raised its offer for British rival SABMiller to STG68 billion ($A144 billion), or STG42.15 per share, only to be told it was still too low to achieve one of the largest ever corporate takeovers.
A spin-off of Yum!
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Yum! Brands, Inc. (NYSE:YUM), have shown a high EPS growth of 0.90% in the last 5 years. Finally, Morgan Stanley restated an “equal weight” rating and issued a $82.00 price target on shares of Yum!
