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Yum! Brands (YUM)
NYSE:YUM
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Yum! Brands
(NYSE:YUM)
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Rating:74Outperform
Price Target:
$180.00
▲(10.48% Upside)
Action:UpgradedDate:02/06/26
The score is driven by strong cash flow and operating performance plus supportive technical momentum. Offsetting factors are the highly leveraged balance sheet (negative equity) and a relatively expensive valuation, while earnings call commentary is net positive despite ongoing Pizza Hut headwinds.
Positive Factors
Free cash flow generation
Yum sustains robust cash generation: operating cash flow rose to ~$2.0B and free cash flow to ~$1.6B in 2025. Strong FCF supports reinvestment, unit development, share returns and debt servicing over multiple years, providing durable financial firepower despite capital intensity.
Franchise-led unit growth & system sales
The franchise-heavy model and sustained unit growth (>4,550 units in 2025) with system sales up 5% offer scalable, low-capex expansion and recurring fee revenue. This structural growth engine enhances long-term margins and global footprint resilience versus company-operated models.
Digital/Byte platform scale
Large and expanding digital mix (~$11B sales, ~60% digital mix) and Byte adoption (370M+ transactions) create durable operational advantages: higher AUVs, lower ordering friction, improved inventory/control and recurring technology-driven margin uplift as rollout scales across franchisees.
Negative Factors
High leverage & negative equity
Capital structure is aggressive with very high debt and deeply negative equity, which reduces flexibility to fund investments or absorb shocks. While FCF helps, persistent negative equity increases refinancing and covenant risk and magnifies sensitivity to higher interest rates or cash-flow volatility.
Pizza Hut structural underperformance
Ongoing Pizza Hut strategic review and planned ~250 U.S. closures signal structural franchise and AUV challenges. Persistent underperformance and one-time investments compress segment profit and require long-term repositioning, creating execution risk and slower consolidated margin recovery.
Margin compression and net income pressure
Although revenue grew, margins have compressed versus earlier years and net income fell from 2023 to 2025, indicating rising costs or below-the-line pressures. If cost inflation or integration expenses persist, sustaining historical profitability and EPS growth will be more challenging.
Yum! Brands (YUM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$45.04B
Dividend Yield1.84%
Average Volume (3M)2.03M
Price to Earnings (P/E)30.3
Beta (1Y)0.30
Revenue Growth11.60%
EPS Growth-4.33%
CountryUS
Employees40,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)1.73
Shares Outstanding276,430,100
10 Day Avg. Volume1,685,582
30 Day Avg. Volume2,027,919
Financial Highlights & Ratios
PEG Ratio4.59
Price to Book (P/B)-5.74
Price to Sales (P/S)5.12
P/FCF Ratio25.66
Enterprise Value/Market Cap1.24
Enterprise Value/Revenue6.81
Enterprise Value/Gross Profit14.74
Enterprise Value/Ebitda20.09
Forecast
1Y Price Target
$170.71Price Target Upside4.78% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering19
EPS Forecast (FY)6.66
Revenue Forecast (FY)$9.07B
Yum! Brands Business Overview & Revenue Model
Company DescriptionYUM! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates through four segments: the KFC Division, the Taco Bell Division, the Pizza Hut Division, and the Habit Burger Grill Division. The company operates restaurants under the KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill brands, which specialize in chicken, pizza, made-to-order chargrilled burgers, sandwiches, Mexican-style food categories, and other food products. As of December 31, 2021, it had 26,934 KFC units; 18,381 Pizza Hut units; 7,791 Taco Bell units; and 318 The Habit Burger Grill units in approximately 157 countries and territories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was incorporated in 1997 and is headquartered in Louisville, Kentucky.
How the Company Makes MoneyYum! Brands generates revenue primarily through franchising its restaurant brands and company-operated restaurants. The company's revenue model includes franchise fees, which are collected from franchisees as a percentage of their sales, along with initial franchise setup fees. Additionally, Yum! Brands earns revenue from company-operated locations by selling food and beverages directly to customers. Key revenue streams are bolstered through strategic partnerships with suppliers and technology companies to enhance delivery and digital ordering platforms. The company also benefits from economies of scale and brand recognition, which drive customer loyalty and repeat business across its various brands.
Yum! Brands Key Performance Indicators (KPIs)
Any
Number of Restaurants
Tracks the total count of operational locations, reflecting expansion efforts, market penetration, and potential for revenue growth.
Tracks the total count of operational locations, reflecting expansion efforts, market penetration, and potential for revenue growth.
Data provided by:
The Fly
The FlyYum! Brands Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call highlighted multiple strong operational and financial wins — notably robust Taco Bell performance, record KFC unit development, meaningful digital adoption and margin expansion — while acknowledging focused near-term pain points primarily at Pizza Hut (same-store sales decline, targeted closures, and one-time investments) and some market-specific disruptions (Turkey closures, integration costs). Management emphasized strategic priorities to drive higher AUVs, accelerate franchisee economics, and scale the Byte platform. On balance, the positives (broad brand momentum, digital scale, unit growth, and EPS/margin expansion) outweigh the lowlights tied mostly to one underperforming brand and localized issues.Q4-2025 Updates
Positive Updates
Strong System Sales Growth
Q4 system sales grew 5% (driven by 3% unit growth and 3% same-store sales); full-year system sales grew 5%, led by Taco Bell (8% full-year system sales) and KFC (6% full-year system sales).
Taco Bell Outperformance
Taco Bell delivered exceptional results with ~7% same-store sales growth (highlighted by management), 8% full-year system sales growth, 10% divisional core operating profit growth, strong market-share gains, and Taco Bell US restaurant-level margins of 25.7% in Q4 (50 bps expansion) and 24.4% for the full year.
KFC Record Unit Development and Profitability
KFC delivered record gross unit openings (nearly 3,000 units for the year and over 1,100 in Q4), 6% system sales growth, and 10% divisional core operating profit growth; notable unit expansion across 105 markets and milestone of 30,000th international restaurant.
Digital & Byte Platform Traction
Digital sales topped $11 billion and grew 25% YoY, raising digital mix to nearly 60%; Byte platform: smart ops in >7,000 restaurants, digital ordering bundle in ~18,000, at least one Byte product live in ~38,000 restaurants globally; Byte processed >370 million digital transactions (+~60% YoY) with measurable ops benefits (e.g., up to 75% reduction in aggregator ordering failure rates, up to 85% reduction in stock outs).
Margin Expansion and EPS Growth
Company Q4 core operating profit grew 11%; full-year core operating profit grew 7% (10% ex-Pizza Hut). Ex-special EPS was $1.73 in Q4 and ex-special EPS for the year was $6.05 (up 10%). Company restaurant margins in Q4 were 16%.
Robust Unit Development Across Portfolio
Opened >1,800 new units in Q4 and >4,550 new units for the year across the portfolio; Taco Bell opened 228 units in Q4 (155 international gross units, +~40% YoY international development) and Pizza Hut still opened significant gross units globally (~1,200 in 2025).
Capital Allocation and Balance Sheet Actions
Net CapEx of $293 million for the year (with $371 million gross CapEx and $78 million refranchising proceeds); completed a 128-unit Taco Bell acquisition for $668 million; returned ~ $1.35 billion to shareholders via dividends and buybacks; net leverage ended the year at ~4x with intent to hold around that level.
Clear Strategic Priorities and Long-Term Targets
Management outlined a 'Raise the Bar' plan focused on (1) battling for the future consumer, (2) accelerating restaurant-level economics, and (3) reaching the full potential of Byte; Taco Bell 2030 ambitions reiterated (approx. $3.0M US AUV target, 3,000 international stores, and 25–26% US restaurant-level margin).
Negative Updates
Pizza Hut Underperformance and Ongoing Strategic Review
Pizza Hut reported a 1% same-store sales decline globally for Q4 and the year; strategic review underway with potential structural actions. Management expects Q1 Pizza Hut core operating profit to be down ~15% (due to one-time Hutt Forward marketing support and integration costs).
Planned Pizza Hut Store Closures
Management expects ~250 targeted US Pizza Hut closures in H1 2026 as part of the Hutt Forward program, which will cause a near-term decline in global Pizza Hut units and weigh on short-term results.
Impact from Turkey and Market-Specific Challenges
Turkey closures in 2025 reduced KFC net new unit growth (management noted KFC would have set a net new unit record absent Turkey closures), representing an identifiable drag on year results.
Incremental Special Expenses and Integration Costs
Q4 reported G&A included $40 million of special expenses primarily related to the Pizza Hut strategic options review; 2026 will include integration-related G&A growth tied to recently acquired stores (e.g., UK acquisitions).
Yum China & AUV Composition Effects
Yum China strategy (strong transaction and SSS performance but mathematically lower AUVs) and lower-AUV development mix in some markets can mute system-wide AUV and revenue per unit metrics despite healthy unit growth.
Byte International Rollout Constraints
Management noted the international rollout of Byte requires careful alignment with franchisees and change-management planning (smart ops implementation and local system integration are gating factors), meaning benefits will accrue over a multi-year rollout rather than immediately across all markets.
Company Guidance
Guidance highlights: excluding Pizza Hut, Yum expects to meet or exceed every element of its long‑term growth algorithm in 2026 — including delivering over 5% net new unit growth and roughly 8% core operating profit growth ex‑Pizza Hut — while maintaining net leverage at about 4x. Taco Bell US restaurant‑level margins are expected to be 24–25%; ex‑Pizza Hut ex‑special G&A is expected to grow mid‑single digits (including incremental overhead from the Q4 Taco Bell US store acquisition); amortization of reacquired franchise rights will increase by $30 million; interest expense is expected to be $500–$520 million; and the effective tax rate is expected to be 22–24%. For Pizza Hut specifically, Q1 core operating profit is expected to be down ~15% due to Hutt Forward marketing support and integration costs, with ~250 targeted U.S. closures in H1 and seasonally stronger gross openings in the back half as the strategic review is completed this year.Yum! Brands Financial Statement Overview
Summary
Strong operating model with steady revenue growth, high operating margins, and robust/improving free cash flow. However, the balance sheet is a material risk with very high debt and deeply negative equity, reducing financial flexibility despite strong cash generation.Income Statement
Revenue has grown steadily from $5.7B (2020) to $8.2B (2025), with the latest year showing a notable step-up versus 2024. Profitability is a clear strength: gross margin remains strong (~46% in 2025) and operating profitability is high (EBIT margin ~31% in 2025). The main weakness is some margin compression versus earlier years (gross and net margins are below 2021–2023 levels), and net income dipped from 2023 to 2025 despite higher revenue, suggesting higher costs and/or below-the-line pressure.78
Positive
Balance Sheet
Leverage is the key risk: total debt remains very high at ~$11.9B (2025) while stockholders’ equity is deeply negative (about -$7.3B in 2025). Total assets have risen, but the capital structure remains aggressive, and returns on equity are negative due to the negative equity base. While this structure can be manageable for stable franchise-heavy restaurant models, it reduces balance-sheet flexibility and increases sensitivity to funding costs or downturns.33
Negative
Cash Flow
Cash generation is strong and improving: operating cash flow increased to ~$2.0B in 2025 from ~$1.3B in 2020, and free cash flow rose to ~$1.6B in 2025. Free cash flow has been resilient with positive growth in most years (with a notable decline in 2022), and free cash flow roughly matches net income in 2025, indicating solid earnings-to-cash conversion. Overall, cash flow strength helps offset balance-sheet leverage, though consistency should be monitored given the 2022 softness.82
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 8.21B | 7.55B | 7.08B | 6.84B | 6.58B |
| Gross Profit | 3.79B | 3.58B | 3.50B | 3.31B | 3.17B |
| EBITDA | 2.78B | 2.56B | 2.48B | 2.33B | 2.38B |
| Net Income | 1.56B | 1.49B | 1.60B | 1.32B | 1.57B |
Balance Sheet | |||||
| Total Assets | 8.20B | 6.73B | 6.23B | 5.85B | 5.97B |
| Cash, Cash Equivalents and Short-Term Investments | 709.00M | 707.00M | 512.00M | 587.00M | 486.00M |
| Total Debt | 11.91B | 12.29B | 12.03B | 12.66B | 12.13B |
| Total Liabilities | 15.52B | 14.38B | 14.09B | 14.72B | 14.34B |
| Stockholders Equity | -7.33B | -7.65B | -7.86B | -8.88B | -8.37B |
Cash Flow | |||||
| Free Cash Flow | 1.64B | 1.43B | 1.32B | 1.15B | 1.48B |
| Operating Cash Flow | 2.01B | 1.69B | 1.60B | 1.43B | 1.71B |
| Investing Cash Flow | -1.00B | -422.00M | -107.00M | -202.00M | -173.00M |
| Financing Cash Flow | -924.00M | -1.16B | -1.43B | -1.32B | -1.77B |
Yum! Brands Technical Analysis
Positive
162.92
Price Trends
156.75
Positive
151.19
Positive
147.88
Positive
Market Momentum
2.82
Negative
55.01
Neutral
58.77
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For YUM, the sentiment is Positive. The current price of 162.92 is above the 20-day moving average (MA) of 161.75, above the 50-day MA of 156.75, and above the 200-day MA of 147.88, indicating a bullish trend. The MACD of 2.82 indicates Negative momentum. The RSI at 55.01 is Neutral, neither overbought nor oversold. The STOCH value of 58.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for YUM.
Yum! Brands Risk Analysis
Yum! Brands disclosed 28 risk factors in its most recent earnings report. Yum! Brands reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Yum! Brands Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $24.16B | 22.41 | 54.10% | 3.06% | 8.61% | 9.39% | |
75 Outperform | $237.86B | 28.53 | ― | 2.31% | 1.26% | 2.87% | |
74 Outperform | $45.04B | 30.31 | ― | 1.84% | 11.60% | -4.33% | |
67 Neutral | $47.79B | 32.10 | 47.36% | ― | 7.31% | 5.26% | |
67 Neutral | $13.50B | 22.90 | ― | 1.63% | 3.92% | 4.98% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $110.24B | 81.66 | ― | 2.88% | 2.80% | -50.71% |
* Consumer Cyclical Sector Average
YUM
Yum! Brands
162.92
7.50
4.83%
CMG
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36.69
-16.48
-30.99%
DRI
Darden Restaurants
209.87
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12.17%
DPZ
Domino's Pizza
401.37
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-15.36%
MCD
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334.82
34.30
11.41%
SBUX
Starbucks
96.76
-12.29
-11.27%
Yum! Brands Corporate Events
Business Operations and StrategyShareholder Meetings
Yum! Brands Updates Bylaws to Enhance Governance
Neutral
Nov 26, 2025
On November 21, 2025, Yum! Brands, Inc. announced amendments to its Amended and Restated Bylaws, which include changes to shareholder meeting procedures and director nomination processes. These amendments aim to streamline shareholder interactions and enhance governance, potentially impacting the company’s operational efficiency and stakeholder engagement.
The most recent analyst rating on (YUM) stock is a Buy with a $173.00 price target. To see the full list of analyst forecasts on Yum! Brands stock, see the YUM Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.