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McDonald’s Corporation (MCD), Yum! Brands, Inc. (YUM): Bite It or Spit It?

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Yum! Brands, Inc. (NYSE:YUM) is possibly the largest restaurant company with over 39,000 outlets all around the world. Yum!’s three major restaurants include Pizza Hut, Taco Bell, and KFC. The company has several major divisions, including its U.S headquarters, Yum! China, Yum! India, and its international restaurants division.

Yum! Brands, Inc.(NYSE:YUM)

Yum! Brands, Inc. (NYSE:YUM) is definitely a huge brand, which is why it has been making headlines. China is considered as Yum!’s biggest market, and most of its revenue comes from the Chinese division. After a recent chicken safety controversy, Yum! has received a lot of criticism about its chicken supply in China. The company has been looking shaky after the incident, as it saw a 20% sales decline in January from the Chinese market.

McDonald’s Corporation (NYSE:MCD) is probably Yum!’s biggest competitor, with over 33 million restaurants all over the world. Even though McDonald’s Corporation (NYSE:MCD) is a single brand, the company is still one of the most popular chains around the world.

Domino’s Pizza, Inc. (NYSE:DPZ) is another big competitor as the restaurant chain has over 10,000 outlets around the world. Domino’s might not be a direct competitor to Yum!; however, the company is a direct competitor to Pizza Hut, which is one of the biggest divisions under Yum!.

Valuation

With a market cap of nearly $31.5 billion, Yum! Brands, Inc. (NYSE:YUM) is currently trading between $68 to $71. After reaching the $74 mark last year, Yum fell to $62 in February, with one of the reasons being its recent controversy in the Chinese market. Since then, the company has been growing, and many observers believe that the China chicken scare is now behind the company.

McDonald’s Corporation (NYSE:MCD), on the other hand, has a market cap of around $99.5 billion and is currently trading between $98 to $100. The company fell from $94 to $84 in November last year; however, since then, McDonald’s share price has been going up.

Domino’s has also seen some growth, compared to the previous year, as the stock is trading between $50 to $52. With a market cap of over $2.87 billion and a dividend yield of 1.6%, Domino’s is also one of the better companies, for potential investors, in the restaurants industry

Yum! Brands, Inc.: The good

Even though Yum!’s recent chicken supply created panic amongst Chinese consumers, the country is still Yum!’s strongest target audience. David Novak, Yum!’s CEO, recently stated that the company has seen similar incidents in the past, including the avian flu case where sales went down nearly 40%. He also stated that the company has a strong presence in China, which will help it expand further. Yum!’s biggest strength has been the expansion in several new countries, with China being the company’s biggest growth opportunity.

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