With Yum! Brands in focus the next week with upcoming analyst meetings in China and India, along with activist investor comments regarding its China business, OTAS can be a helpful tool to determine investor sentiment.
YUM has recently broken out vs. the industry and market, +5.10% over the past week vs. the industry group. The spread of the stock price vs. the industry is +10% and above the 2 standard deviation level.
This recent rally has made the Valuations expensive and the Dividend Yield lower than normal levels. Both the 12M Forward P/E on an absolute basis and vs. the industry are over 2 standard deviations away from normal levels. YUM P/E is at a premium at 1.1x the industry average:
The dividend yield at 1.86% is below 1 standard deviation vs. normal levels and at a 19% discount but it is well covered.
The CDS levels have been rising over the past month, making the stock price and CDS levels divergent. We have also seen a sharp increase over the past week.
While Implied Vol is higher than normal at a 12% discount to the industry vs. 19% last week, the absolute level has been increasing over the past week. However, we do see that investors are positioning themselves bullishly as the Upside Skew has increased implying people are paying more for upside and the Downside Skew has remained below 1 standard deviation, implying investors are paying less for downside protection. The Put Ratio has fallen below 1 standard deviation as people are transacting more in calls.