Option Trade 
Yum! Brands, Inc. (NYSE:YUM) Calls 
Tuesday, 02 February, 2016

**OPTION TRADE: Buy the YUM Apr 2016 75.000 call (YUM160415C00075000) at approximately $2.60. Place a pre-determined sell at $5.50.

Note: No protective stop losses added -- but if you wish to do so make it $1.10.

by Ian Harvey

February 02, 2016

Yum! Brands, Inc. (NYSE: YUM), engaged in the restaurant business, is set to release financial results for fourth quarter of fiscal '15 (4QFY15) tomorrow, February 3rd, 2015. Analysts seem bullish and project a sharp rise in earnings this time around.

With three big fast-food chains under its banner, namely KFC, Pizza Hut, and Taco Bell, the company is expected to report revenue of about $4.03 billion, which would reflect a 0.8% rise in sales, compared to same quarter last year.

Earnings per share (EPS) forecast for 4Q is $0.66, up about 38% against the same quarter previous year. Gross margin is projected to clock in at 24.7%. And, net income margin is expected at 7.1%. A massive surge in the company’s bottom line is also expected.

The company is likely to announce a spinoff of its business in China i.e. Yum! China — which is expected to become its biggest franchise. It will also help the company deal with volatile economic conditions in the region. The company reported a slight rise in sales at established China restaurants in December. The company has also said it will return up to $6.2 billion to shareholders before separating its China business and listing it on the New York Stock Exchange, and possibly in Hong Kong.

Analysts expect revenue and earnings to increase till fiscal year 2017 — with earnings of $3.16 for full year 2015, and revenue of $13.19 billion.

Shares of Yum! Brands opened at 72.37 on Monday. The company’s 50-day moving average price is $71.01 and its 200-day moving average price is $76.54. Yum! Brands has a 52-week low of $66.35 and a 52-week high of $95.90. The firm has a market cap of $31.21 billion and a PE ratio of 34.58.

A number of large investors have recently modified their holdings of YUM. Janus Capital Management increased its stake in shares of Yum! Brands by 2,264.1% in the third quarter. To mention a couple of these -- Janus Capital Management now owns 522,051 shares of the restaurant operator’s stock valued at $41,738,000 after buying an additional 499,969 shares during the period. BB&T Securities increased its stake in shares of Yum! Brands by 456.3% in the fourth quarter. BB&T Securities now owns 45,630 shares of the restaurant operator’s stock valued at $3,333,000 after buying an additional 37,427 shares during the period.

Oppenheimer reissued an “outperform” rating and set a $88.00 price target on shares of Yum! Brands in a research report on Monday, January 4th.

Three investment analysts have rated the stock with a sell rating, eleven have given a hold rating, ten have given a buy rating and one has issued a strong buy rating to the company’s stock. The stock has a consensus rating of “Hold” and an average target price of $82.91.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the YUM Apr 2016 75.000 call (YUM160415C00075000) at approximately $2.60. Place a pre-determined sell at $5.50.

Note: No protective stop losses added -- but if you wish to do so make it $1.10.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



Back to Stock Options Made Easy Home Page

Back to Option Trades from Option Trade – Yum! Brands, Inc. (NYSE:YUM) Calls - Tuesday, 02 February, 2016



Get all the latest options news from
STOCK OPTIONS MADE EASY with our FREE newsletter


Enter Your Email Address

Enter Your First Name









Search Stock Options
Made Easy



Enjoy Relaxed or Fast-Paced Trading? Choose your Membership Style...

Whether you prefer to take a laid-back approach to your trading,

or to charge ahead in your options trading,

 Stock Options Made Easy Armchair Trader and Cut-to-the-Chase Trader Memberships put everything you need to succeed at your fingertips for just  $39 or $79 per month.






Subscribe to our FREE
newsletter for all the latest options news!


Enter Your Email Address

Enter Your First Name











Follow S_O_M_E on Twitter