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$35.15 1.10 (3.23%)
7/18/2008 4:03 PM

Yum! Brands, Inc. (YUM)

CAPS Rating:
****

Quick service restaurant company comprised of the worldwide operations of A&W All-American Food Restaurants, KFC, Long John Silver's, Pizza Hut and Taco Bell.

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Avatar NetscribeRstrnts (< 20) Submitted: 12/12/06 9:00 AM : Outperform Start Price: $28.79 YUM Score: 33.14

Yum! is becoming “Yummier” day by day

Yum! Brands, Inc. is the world's largest restaurant company in terms of locations with over 34,000 restaurants in over 100 countries. Four of the company’s restaurant brands - KFC, Long John Silver's, Pizza Hut, and Taco Bell - are the global leaders of chicken, quick-service seafood, pizza, and Mexican-style food categories. Moreover, the company’s fifth brand, A&W Restaurants, is the longest running quick-service franchise chain in America.

Yum! Brands has just begun to capture the huge new unit opportunities in its international businesses, where it has very little competition. Nearly 50% of the company’s profit comes from its international businesses. Apart from this, the company is in the right international markets with a head start in China. The company is also focusing on other high-opportunity markets like India and Russia. In addition, the company eyes at about 60% profit from international businesses in the next five years.

Yum! Brands is planning to focus on its four key strategies - building dominant restaurant brands in China, driving profitable international expansion, steadily improving its U.S. brands and operations, and adopt multi-branding in mature locations. By this, the company expects an overall growth in the U.S. operations, as well as in international markets. The company’s U.S. operations are struggling to grow as its Pizza Hut brand has taken a hit in the U.S. and has been showing a declining trend in the comparable store sales for the past five quarters. The company is trying to rebuild the brand by developing WingStreet, which looks like an attractive co-branding option for the maturing Pizza Hut brand.

Nevertheless, the dual-income households’ and consumers' increased desire for convenient meal solutions provide an attractive landscape for long-term sales growth in the restaurant industry. Yum! Brands, Inc. has developed a strong portfolio of quick-service restaurant chains with promising domestic and international growth opportunities and has become an innovative leader in the restaurant industry thereby offering good prospects to the investors.

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Avatar NetscribeRstrnts (< 20) Submitted: 5/08/07 8:00 AM

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Falling dollar and rising international sales contributed to the fortunes the world’s largest quick service restaurant chain, of Yum! Brands Inc. The company reported revenue of $1.94 billion in the quarter and earnings of $194 million compared to revenue of $1.82 billion and earnings of $170 million a year ago. The company’s shares surged by around 6% after the company announced these results.

The company generates approximately 49% of its sales from its international operations and revenues in China increased by 24%. Globalization is driving growth at the restaurant chain and banking upon this the company has identified three major and three minor markets. The major markets in order of precipitated growth are; China, Japan and U.K. and the minor markets are; Korea, Australia and Canada. Moreover its international unit has recently entered a franchise agreement to expand its KFC chain in Brazil with a large fast-food chain operator in the South American country.

With the brands like KFC, Long John Silver's, Pizza Hut, and Taco Bell under its belt Yum enjoys a dominant position in the Quick service restaurant segment all over the world. The company has just begun to capture the huge new unit opportunities in its international businesses, where it has very little competition. The company is focusing on increasing its share from international markets to 60%. With the market for the restaurant industry growing all over the world it is expected that the company will put forth a solid growth performance in coming months, with most of it contributed by the international markets.

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