Yum! Brands (NYSE:YUM) Board of Directors Approves Share Repurchase Program

Yum! Brands (NYSE:YUM) announced that its Board of Directors has authorized a stock repurchase program on Tuesday, June 16th, RTT News reports. The company plans to buyback $4.00 billion in outstanding shares. This buyback authorization authorizes the restaurant operator to repurchase up to 9.4% of its shares through open market purchases. Shares buyback programs are often a sign that the company’s board believes its shares are undervalued.

Yum! Brands Stock Up 2.0%

YUM traded up $3.02 during trading on Tuesday, reaching $157.69. The company’s stock had a trading volume of 2,734,014 shares, compared to its average volume of 2,096,006. The firm has a fifty day simple moving average of $154.99 and a two-hundred day simple moving average of $155.74. Yum! Brands has a 1 year low of $137.33 and a 1 year high of $169.39. The company has a market cap of $43.46 billion, a price-to-earnings ratio of 25.43, a PEG ratio of 1.97 and a beta of 0.57.

Yum! Brands (NYSE:YUM) last released its earnings results on Wednesday, April 29th. The restaurant operator reported $1.50 earnings per share for the quarter, topping analysts’ consensus estimates of $1.39 by $0.11. Yum! Brands had a net margin of 20.48% and a negative return on equity of 23.51%. The business had revenue of $2.06 billion for the quarter, compared to analyst estimates of $2.04 billion. During the same period last year, the company posted $1.30 EPS. The business’s revenue was up 15.2% on a year-over-year basis. As a group, equities analysts forecast that Yum! Brands will post 6.78 EPS for the current fiscal year.

Yum! Brands Announces Dividend

The company also recently declared a quarterly dividend, which was paid on Friday, June 12th. Stockholders of record on Wednesday, May 27th were given a dividend of $0.75 per share. This represents a $3.00 annualized dividend and a dividend yield of 1.9%. The ex-dividend date of this dividend was Wednesday, May 27th. Yum! Brands’s payout ratio is presently 48.39%.

Analysts Set New Price Targets

A number of research firms have recently commented on YUM. Citigroup raised their target price on Yum! Brands from $174.00 to $175.00 and gave the company a “neutral” rating in a research report on Thursday, April 30th. Morgan Stanley upgraded Yum! Brands from an “equal weight” rating to an “overweight” rating and raised their target price for the company from $180.00 to $185.00 in a research report on Wednesday, June 3rd. Deutsche Bank Aktiengesellschaft set a $177.00 target price on Yum! Brands in a research report on Thursday, April 30th. Weiss Ratings cut Yum! Brands from a “buy (b+)” rating to a “buy (b)” rating in a research report on Wednesday, May 6th. Finally, Evercore restated an “outperform” rating on shares of Yum! Brands in a research report on Tuesday. Twelve analysts have rated the stock with a Buy rating and seven have given a Hold rating to the stock. According to data from MarketBeat, the company presently has an average rating of “Moderate Buy” and an average price target of $176.12.

Key Headlines Impacting Yum! Brands

Here are the key news stories impacting Yum! Brands this week:

• Positive Sentiment: Yum! Brands agreed to sell Pizza Hut outside mainland China to LongRange Capital and Pizza Hut’s mainland China business to Yum China, simplifying the portfolio and sharpening the company’s focus on stronger brands. Reuters article
• Positive Sentiment: The board approved an additional $4 billion share repurchase authorization, signaling management expects to return a meaningful portion of the sale proceeds to shareholders. RTTNews article
• Positive Sentiment: The transaction could improve Yum’s growth profile and margins by exiting a struggling chain that has been losing market share and weighing on earnings. CNBC article
• Neutral Sentiment: Yum! Brands also showcased a broader refresh at KFC, including new menu items, drinks, branding, and store concepts, which supports the long-term strategy but is not an immediate earnings catalyst. Fox Business article
• Neutral Sentiment: TD Cowen reaffirmed a Buy rating and raised its price target to $180, reinforcing a constructive analyst view on the stock. Benzinga article

Insider Activity

In other news, CEO Scott Mezvinsky sold 261 shares of Yum! Brands stock in a transaction that occurred on Monday, June 1st. The shares were sold at an average price of $148.14, for a total transaction of $38,664.54. Following the sale, the chief executive officer owned 483 shares of the company’s stock, valued at approximately $71,551.62. The trade was a 35.08% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Sean Tresvant sold 3,000 shares of Yum! Brands stock in a transaction that occurred on Tuesday, May 26th. The shares were sold at an average price of $154.68, for a total transaction of $464,040.00. Following the sale, the chief executive officer directly owned 3,140 shares in the company, valued at approximately $485,695.20. The trade was a 48.86% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold a total of 5,895 shares of company stock worth $906,499 in the last 90 days. 0.14% of the stock is owned by corporate insiders.

Yum! Brands Company Profile

Yum! Brands, Inc (NYSE: YUM) is a global quick-service restaurant company that develops, operates and franchises a portfolio of well-known restaurant brands. The company’s principal brands are KFC, Pizza Hut and Taco Bell, each focused on distinct product categories—KFC on fried chicken and related menu items, Pizza Hut on pizza and complementary offerings, and Taco Bell on Mexican-inspired quick-service food. Yum! is headquartered in Louisville, Kentucky and was formed as Tricon Global Restaurants in 1997 when PepsiCo spun off its restaurant businesses, later adopting the Yum! Brands name.

The company’s operating model centers on brand development, system growth and franchising; a large portion of its restaurants are operated by independent franchisees, and Yum! generates revenue through franchise royalties and fees in addition to sales from company-operated locations.