If you think more people in China will be eating out, then a great way to play that trend is Yum Brands (YUM).
Yum Brands operates 37,000 quick service restaurants worldwide under the KFC, Pizza Hut, Taco Bell, Long John Silver’s, and A&W brands. The company currently has over 3,500 restaurants in China–that is nearly 10% of its total store count.
What’s more, Yum Brands continues to open new restaurants in China at a pretty good clip. In the last year, Yum Brands opened over 400 new restaurants in China, an increase of 14% year-over-year.
Yum Brands is a Zacks #2 Rank stock that trades at 16.6x 2010 EPS estimates and 14.8x 2011 EPS estimates.
Growth and Income
Analysts estimate that Yum Brands will grow its earnings per share at 14.0% in 2010, 12.1% in 2011, and 11.5% per year for the next 3 to 5 years. Its stock also has a dividend yield of 2.0%.
Business
First-Quarter Results
The company’s first-quarter revenue increased 6% to $2.35 billion. The company earned $0.59 per share, an increase of 22.9% compared to the year-ago quarter. Yum Brands beat the Zacks Consensus Estimate by 6 cents, or 11.3%.
In the last five quarters, Yum Brands has beaten the Zacks Consensus by an average of 14.1%.
Estimates
After the company’s better-than-expected Q1 results, consensus estimates for 2010 and 2011 moved higher. The Zacks Consensus for 2010 increased 7 cents, 2.9%. The Zacks Consensus for 2011 rose 9 cents, or 3.0%. Consensus EPS estimates have held steady in the last two months.
The Chart
From April 2009 through March 2010, YUM shares were stuck in a trading range between $32 and $36. The stock broke out of that range on March 8 and proceeded to rocket higher until the end of April. Along with the overall market, YUM shares have experienced increased volatility in the last month. Still, the stock is just 6% off its 52-week high of $44.
