Did you know they are actually a spin-out from Pepsi in 1997? -
Yum Brands - Defining Global Company that Feeds the World So the real story of globalization is in Pepsi-co - did you know they went bankrupt 3 times? Sugar rationing from WWII being one of the causes - anyway they originally went global in 1940, though bankrupted and were sold to Coke defectors heh. In any event, their international focus was mostly stagnant until the 80's when the new CEO of Frito-Lay aggressively went after the global market. The Yum! stock portfolio:
http://finance.yahoo.com/echarts?s=YUM+Interactive#{"range":"max","allowChartStacking":true}
What happened in 2008 that started their stock incline? Globalization.
"But the operator of KFC, Taco Bell, and Pizza Hut isn't gleaming with glory just yet.
Management is hard at work restructuring its menu, strategically growing its business outside of the U.S., and returning capital to shareholders. It's anyone's guess whether our economy will be able to get back on track in the next year. However, regardless of further slowing of domestic customer spending, Yum! Brands' international presence and plans to renovate its product selection have convinced me to recommend this as the best stock for 2008.
America: Land of no growthI
recently commented on the notion that the U.S. just isn't the economy it once was. Even when consumer spending is robust, competition in the domestic restaurant industry is fierce, making it difficult for new concepts to enter the market. Additionally, as
we've observed with Starbucks (NYSE: SBUX ) , chains that have already proven successful find it difficult to continuously expand their market share once they begin to saturate the market.
Yet even after boasting the most system restaurants in the world, Yum! Brands is far from inundating the globe with its fast-food chains. Admittedly, domestic growth is waning with over 20,000 restaurants. In fact, U.S. sales have been falling slightly in the past year, exacerbated by the e. coli and rat incidents at Taco Bell. But international potential is huge for the company, specifically China.
Last year, domestic sales slipped 6%, while international grew 9% and China increased 26%. Not only is the company growing revenue at a rapid clip overseas, but its operations are more profitable. In 2006, international operating margins were well over 17% of sales, while the U.S. division only posted 13.6% operating margins." ~
Best Stock for 2008 Yum Brands YUM
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And what does Yum! say? "Yum! Brands, Inc., based in Louisville, Kentucky, has over 41,000 restaurants in more than 125 countries and territories. Yum! is ranked #228 on the Fortune 500 List with revenues of over $13 billion. In 2014 Yum! was named among the top 100 Corporate Citizens by Corporate Responsibility Magazine and one of the Aon Hewitt Top Companies for Leaders in North America. The Company's restaurant brands –
KFC®,
Pizza Hut® and
Taco Bell® – are the global leaders of the chicken, pizza and Mexican-style food categories. Outside the United States, the Yum! Brands system opens over five new restaurants per day on average, making it a leader in international retail development.
[...]
"We maintain a consistent commitment to deliver at least 10% EPS growth annually.
With over 41,000 restaurants in more than 125 countries and territories, Yum! Brands' international growth sees no signs of stopping as we continue to enter international markets, introducing people around the world to our winning brands." ~
Yum Brands - Defining Global Company that Feeds the World
Even more telling their annual report from 2014:
"In 2014 we grew full-year EPS 4% to $3.09 per share, excluding Special Items. This was well below our 2014 full-year target of at least 20%. These results were heavily skewed by the challenges handed to our biggest division as we suffered two highly publicized supplier incidents in two years in China. However, we know our brands are resilient and continue to believe this setback is temporary. After our first supplier incident, which negatively impacted 2013, we recovered and delivered strong results in the first half of 2014. Specifically, our China Division operating profit increased 116% and Yum! EPS grew 27% through our first two quarters, prior to Special Items. We were convinced 2014 would be a year of at least 20% EPS growth. The July Shanghai Husi supplier incident changed all that. However, we are fully committed to achieving at least 10% EPS growth in 2015 and I'm confident we have the people and plans in place to deliver double-digit growth going forward.
[...]
Given our long-term positive outlook for China – and our continued belief that our current sales issues are temporary – we opened 737 new restaurants across the country in 2014. We continued our disciplined approach to development, shifting our new-unit program toward higher return investments. In 2015, we plan to open 700 more new units in China. In addition to the massive new-unit opportunity we have with KFC and Pizza Hut Casual Dining, we will continue to expand Pizza Hut Home Service as well.
[...]
In India, system sales increased 14%* for the year and we sustained a strong pace of development, with 156 new restaurants. While we are outperforming the category in India, macroeconomic conditions weighed on our overall results. Yum! India President Niren Chaudhary is using this opportunity to strengthen our positioning with consumers as well as our business model. This will set us up for success in a country which is expected to become the largest consumer market in the world." ~
2014 Yum Brands Annual Report
