Ticker Shock: Why Yum Brands Isn't Looking Appetizing
Wednesday's top stories and stocks with potential to move.
Asian stocks rose as we slumbered. The Hang Seng and the Nikkei were up 2.09% and 0.08% respectively. European stocks were showing me some green earlier this morning. And here in the US, we're currently trading higher.
Here's what I'm seeing this morning:
Yum! Brands (YUM):
Its second quarter wasn't bad, but lacked punch.
Excluding items, it put up $0.50, which was way north of the $0.43 the Street had been expecting.
On the other hand, as this Reuters article points out: "Yum also maintained its forecast calling for per-share earnings growth of at least 10% in 2009 and said it continues to see full-year earnings of $2.10 per share, excluding items. Analysts are expecting $2.12 per share."
1. It's certainly a good company and the outlook isn't bad. But when it comes down to it, I'd rather venture into shares of McDonald's (MCD). Let's face facts: The fast-food chain has been ripping the cover off the ball.
2. On the plus side, if it can find a way to get its stock up just a bit and punch through its 52-week high, it could draw a lot of eyes.
Just in case it's not obvious, I'm mixed on this one.
Its second quarter definitely computes. Despite all the hand-wringing, it came through. The company put up $0.18 excluding items, which was a dime north of expectations. Meanwhile, it beat on the top line as well.
And in terms of its outlook for the third quarter, it offered the following: "Revenue: $8.5 billion, plus or minus $400 million." That's good news because the estimate I'm seeing is for about $7.8 billion.
Some other thoughts:
1. I'm liking it both as a trade and as a longer-term play.
2. Note that's the second quarter in a row it's beat, and it's now beaten expectations in the last 3 out of 4 periods. Pretty sweet.
3. We could see estimates get pumped up in the coming days. If I'm right, this could give the stock a nice goose.
4. As I mentioned in an article earlier in the month, I still think this is the better sandbox to play in when comparing it to Advanced Micro Devices (AMD).
5. If it looks like it's going to hit or beat that 2010 estimate of $0.91, this stock could trade up to the mid $20s.
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