An analyst upgrade Thursday lifted shares ofYum Brands (
) just above a 77.43 buy point from a double-bottom base. The
onetime highflier has seen growth slow in recent years, but it
offers a decent dividend.
The stock gapped up Thursday in above-average volume.
The operator of KFC, Taco Bell and Pizza Hut gets half its
revenue from China. The stock has been hurt some in the past by
reports of bird flu. CEO David Novak said last month that avian
flu has not had a meaningful impact on sales in China, but that
there was a softening of demand for KFC chicken in regions with
significant bird flu cases.
An analyst at Robert W. Baird & Co. upgraded the stock
Thursday to outperform from neutral, raising the price target to
87 from 79.
The stock has been rallying since Feb. 4 after the company
reported better-than-expected earnings. After three quarters of
declining earnings and sales, EPS rose 4% to 86 cents a share.
Analysts were forecasting 80 cents. Sales were up 1%. Same-store
sales in China fell 4% during the quarter, but operating profit
in the region rose 5%.
Analysts are expecting a 20% earnings increase in the current
Yum has a five-year annualized growth rate of 11%. Analysts
forecast a 22% earnings increase in 2014 and a 15% increase in
The Earnings Stability Factor is a favorable 5 on a 0 to 99
scale, where low numbers correspond to stable earnings
The return on equity is 63% and pretax profit margin is
Yum offers a quarterly dividend of 37 cents a share, which
works out to a 2% yield on an annualized basis.
The company has been offering a regular quarterly dividend
since 2004. It started out as 10 cents a share.
It has a three- to five-year dividend growth rate of 15%.