Home Deep Analysis Yum Brands: Solid Revenue Generator, But Upside Is Suspect (NYSE:YUM)

Yum Brands: Solid Revenue Generator, But Upside Is Suspect (NYSE:YUM)

by WOOWinvest
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Yum Brands: Solid Revenue Generator, But Upside Is Suspect (NYSE:YUM)


Dear readers/followers,

Yum Brands (NYSE:YUM), like most consumer staples, is continuously on my list of companies that I look at. The reason is simple – the company’s brands are appealing to a degree that goes beyond recessions and the like – they’re stable

YUM margins to peers

YUM margins to peers (TIKR.com)





YUM brands valuation

YUM brands valuation (FAST graphs)

Yum brands is a very attractive business, holding four very attractive franchises/restaurant brands, three of which have undoubted international fame. The company has decent fundamentals (below-IG credit rating), and superb historical trends, making it a theoretically attractive investment at a decent price – even a premium. I’d like to see a 20-22x P/E before getting into the business, as I want a 15% conservative upside to work with, especially with a 2%-yielding investment. Because of that, I go with a “HOLD” at a PT of $105/share.

This company is overall qualitative. This company is fundamentally safe/conservative & well-run. This company pays a well-covered dividend. This company is currently cheap. This company has a realistic upside based on earnings growth or multiple expansion/reversion.

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