YUM! Brands (NYSE: YUM) operates the greatest number of fast-food locations in the world, with more than 34,500 stores in over 100 countries. Its flagship chains include chicken specialist KFC, pizza server Pizza Hut, and quick-service Mexican leader Taco Bell. YUM! also operates the Long John Silver's seafood chain, along with several hundred A&W root beer and burger stands. The company operates just over 20% of its restaurants. The rest are either franchised, or licensed locations. Burger King (NYSE: BKC) and McDonald's (NYSE: MCD) are major competitors.

The firm surprised the Street earlier in the week when it announced Q3 EPS of 50 cents and revenues of $2.56 billion. Analysts had been expecting 45 cents and $2.46 billion. Management also raised FY07 EPS guidance from $1.63 to $1.65, versus Street consensus of $1.64. The Board authorized the repurchase of an additional $1.25 billion of common stock, boosting the total repurchase plan to $4 billion over the next two years. The stock popped on the news and has since passed into the initial stage of a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the shares with three "strong buys," four "buys" and nine "holds." Analysts see a 12% average annual growth rate, through the next five years. The YUM P/E ratio (22.74), Price to Sales ratio (1.92), Price to Cash Flow ratio (13.63), Price to Free Cash Flow ratio (35.74), EPS Growth rate (21.95%), Return on Assets (14.56%), Return on Investment (20.12%) and Return on Equity (66.18%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 83% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past fifty-two weeks, it has traded between $27.19 and $38.34. A stop-loss of $32.95 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.