Yum! Brands, Inc Better Performance in Emerging Market But Still Lagging Behind in RoE

Yum! Brands, Inc. (NYSE:YUM) which mostly operate in Malaysia, Thailand, South Africa and Indonesia sustained its goal to be the top most company in emerging markets, according to Rachael Rothman, analyst from SIG Financial Group.

Rothman said, YUM which do not operate in the world’s top market like U.S., India and China, has proved its leadership in emerging market and uphold its plans to build up restaurants in frontier markets such as Sub-Saharan Africa, Myanmar and Vietnam mainly through franchisees.

The analyst also added that the company maintained its 15% growth target through emerging markets, 5% from developed markets and it also uphold its 10% annual profit growth target for YRI.

YRI policy is to transfer company ownership more towards emerging markets, as the company has 40% units in emerging market in 2012, and want to achieve 60% units of the company in emerging market, Rothman added in his research note.

While the market like China is not beneficial for the company like YUM as its monthly same-store sales is constantly on decreased in 2013. But the fall is mostly due to its long-term forward P/E average. But  Yum! is likely to boost again in coming year, at 13% using street consensus polled by S&P CapitalIQ.

Despite of having better performance in emerging market other then China and India, YUM is still lagging behind as these markets register lower returns on equity. While the analyst from the firm, has his answer regarding the moved of YUM in emerging market.

According to him in spite of being 92% franchised, YRI has 26% returns on assets for 2012, which is far behind the US return on assets of 34% and China 32%. H also added YRI has had implementation blunder in Australia and Brazil. Within emerging markets, quality maintenance and supply chain remain a concern for customers.

Yum! Brands, Inc. (NYSE:YUM) stock hit highest price at $72.75, beginning with a price of $72.55 and decreased -0.28% to the current price of $72.37 with day range of $72.30 – $72.75. The total market capitalization of the stock is $32.32 billion; total volume held in the current session is 292,292.00 shares which are lower than its average volume of 2.29 million shares.