Is Yum! Brands a Bargain Here?

With shares of Yum! Brands (NYSE:YUM) trading at around $62.08, is YUM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Yum! Brands recently reported earnings that didn’t sit well with investors. However, if you look closely at how the news is being digested, the trend isn’t all bad. The stock was down 5.56 percent after-hours on Monday. On Tuesday, it looked as though the stock was having another off-day, but it actually recouped some of the losses from after-hours trading on Monday. The good news from the earnings report was that revenue and same-store sales were up. The bad news was the impact China KFC had on earnings.

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The Shanghai FDA has concluded that the chicken being served at China KFC had excessive amounts of antibiotics. Once this hit the news, a snowball effect took effect, aided by social media. Once this happened, the story was impossible to contain. As a result, KFC has been hurting. Yum! Brands has stated that it intends to rebuild the brand’s image. This situation will be covered further in the Conclusion section as it should weigh on any investor’s mind. For now, let’s take a look at some important numbers for Yum! Brands.