Yum! Brands, Inc. (YUM) Still Has a Lot of Potential

Domino’s Pizza, Inc. (NYSE:DPZ) has also a significant widespread international footprint and a tough competitor for Yum!. It is known as the pizza delivery expert and generates most of its sales through its home delivery option. Earnings per share growth has been high in the last five years and the company is expected to grow further. The company’s biggest advantage is its relatively low price point compared to Pizza Hut which gives an edge to its offerings. Some of the risks of Domino’s Pizza, Inc. (NYSE:DPZ) outweigh its benefits, however. These include its high leverage, limited growth opportunities in the domestic marketplace and its high advertisement expenditure. These factors limit the company’s growth prospects, putting it slightly behind than the other players in the market.

Future outlook for Yum!

Looking at the stock price behavior of Yum! Brands, Inc. (NYSE:YUM), it lost much of its value before but now has gained some of it back. There is no need for investors to panic. Yum! has many more positives going for it and will be able to bounce back from this brief downturn. It has plans to expand outside China and India, and has already opened 40 restaurants in the UK and Ireland where Domino’s Pizza, Inc. (NYSE:DPZ) and McDonald’s have a significant presence.

Yum! Brands, Inc. (NYSE:YUM) has been reacting quickly to the challenge of increasing sales in China and has the capability to beat the competition in other markets too. I see the company’s stock gaining momentum in the coming few months and eventually getting back to its historically high-yielding nature. With the stock still having a lot of value, I would recommend that investors keep their faith in the company and buy it to gain in the long term.

The article Yum! Brands Still Has a Lot of Potential originally appeared on Fool.com and is written by Tanya Kanodia.

Tanya Kanodia has no position in any stocks mentioned. The Motley Fool recommends McDonald’s. The Motley Fool owns shares of McDonald’s. Tanya is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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