This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
|Zacks Rank||Definition||Annualized Return|
Zacks Rank Education - Learn more about the Zacks Rank
Zacks Rank Home - All Zacks Rank resources in one place
Zacks Premium - The only way to get access to the Zacks Rank
This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
Kentucky-based Yum! Brands Inc. (YUM - Analyst Report) recently lowered its sales expectations from China. China is the largest contributor to its revenue stream, accounting for nearly 55% of total revenue in the third quarter of 2012.
In a recent SEC filing, management stated that its China division’s same store sales are expected to suffer a 6% decline in the just concluded fourth quarter of 2012. The company had previously projected the same store sales in China to decline 4% in the fourth quarter owing to the steep economic slowdown.
The allegations against the company regarding the quality of chicken supplied to KFC are cited to be the reason for such a dismal outlook. Last month, Shanghai Food and Drug Administration (SFDA) reported that eight out of 19 chicken batches supplied to KFC, which were sent for examination in 2010 and 2011, contained a very high amount of antibiotic named amantadine.
Moreover, China’s state television CCTV also reported that two poultry farms in the Shandong province of China that supplied chickens to KFC had fed chicken with unapproved levels of antibiotics. The Chinese government’s investigation followed soon after.
After the announcement of this news, the company stated through a SEC filing that it is always highly concerned regarding the safety of its food products and will be assisting the government in the investigations to resolve this problem.
The negative publicity had also led to a steep fall in the company’s sales during the last two weeks of December.
Despite lowering the fourth-quarter revenue projection in China, Yum! Brands reiterated its adjusted earnings per share forecast for 2012 of at least 13% growth or $3.24 per share.
Yum! Brands currently carries a Zacks #3 Rank (short-term Hold rating). We are also maintaining our long-term Neutral recommendation on the stock.
Please login to Zacks.com or register to post a comment.