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Opinions Paul Harris, CFA
Yum! BrandsYUMBUY ON WEAKNESSMay 30, 2013
$68.60
Stock price when the opinion was issued
$151.60
As of Jun 22, 2026. Market Open.
food services
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BUY
They delivered this morning a huge EPS beat, beat revenues and 9% same-store sales growth, but the stock hardly budged. One reason was that management didn't issue guidance, because the environment is unpredictable, but also the stock has recently run up. Yum includes chains KFC and Pizza Hut.
food services
PAST TOP PICK
(A Top Pick Nov 12/19, Up 6%) Big presence in China, and there's lots of potential there. Also in India and European markets, and you want this exposure to markets not fully developed. Recently bought a new brand, which they can grow and franchise out.
Christine PooleOwned
food services
HOLD
She still owns YUM. Their brand are Pizza Hut, Taco Bell and KFC. In China, they have a large presence -- it represents about 30% of their revenues. Since most locations focused on drive-thru they are doing okay. There is still good growth opportunities overseas and they are looking into India to expand.
Christine PooleOwned
food services
BUY ON WEAKNESS
Two issues right now. Pizza Hut turnaround, and coronavirus. Too early to say how coronavirus will impact it. One positive is they get franchise fees. Likes the long-term profile because of presence in China and other EM. Would wait for the $100 range for new money.
Christine PooleOwned
food services
COMMENT
Now is a good entry point. They own KFC, Taco Bell and Pizza Hut, which are well-represented in China and emerging markets. A third of KFC's revenues come from China. Taco Bell is strong in the US, and will expand internationally. Pizza Hut is the laggard in America where pizza is competitive; are closing some PH locations. They just bought Habit Restaurants, a small California burger chain, which is another branch that YUM can grow. Prefers this to QSR.
Christine PooleOwned
food services
COMMENT
They own Yum! Brands in this space rather than McDonalds. One of the issues is that traffic into stores has been slowing in US locations. Arguably, growth with come in other emerging markets.
food services
TOP PICK
They run three brands. KFC amounts to 50% of their revenue and is exposed internationally where the growth is; their growth prospects look strong. Also holds Taco Bell, which is mostly in the US, but plan to expand internationally. Pizza Hut is underperforming, which is fully mature in the US, so some PHs will close and transform some into drive-thrus. Good management. (Analysts’ price target is $113.36)
Christine PooleOwned
food services
Trades at 20X earnings with a 2.1% yield but China is the big issue. The jewel in the crown is the Taco Bell franchise. The real crux of the issue is the KFC franchise in China with the avian flu. There are some negative issues about the story but they have some really great franchises that make a lot of sense and will do well over the long term. If you see a larger pullback in the stock, he would try to get it at around 15X earnings.