Yum! Brands
YUM
$147.92
-2.75%
Yum! Brands operates the world's largest quick-service restaurant system by store count, with over 63,000 locations across KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill spanning 155 markets. As the second-largest restaurant firm by dollar sales, its 97% franchised model generates predictable royalty and marketing fee income, making it a high-margin, capital-light platform company. The current investor narrative centers on the transformative sale of Pizza Hut for $2.3 billion to streamline the portfolio toward faster-growing KFC and Taco Bell, while navigating a challenging consumer environment marked by rising gas prices and value-seeking behavior. Recent news also highlights Yum China's acquisition of the Pizza Hut brand in China, eliminating future royalty payments and boosting margins.…
YUM
Yum! Brands
$147.92
Related headlines
Investment Opinion: Should I buy YUM Today?
Rating: Hold. YUM is a high-quality franchise business with strong margins and cash flow, but the stock's persistent downtrend and premium valuation suggest limited upside in the near term. The consensus analyst rating is Buy with an average target of $174.24, implying 17.8% upside, but the technical weakness and macro headwinds argue for caution.
Supporting Evidence: YUM's trailing P/E of 27.1x is above the sector median of 22x, but its forward P/E of 19.8x is more reasonable. Revenue growth accelerated to 15.2% YoY in Q1 2026, and net margin expanded to 21.0% from 14.2%. Free cash flow of $1.649B TTM provides strong coverage for dividends and debt. The analyst average target of $174.24 offers 17.8% upside, but the stock's 1-year decline of 0.1% vs. the S&P 500's 18.4% gain highlights the disconnect between fundamentals and price.
Risks & Conditions: The biggest risks are consumer spending weakness, execution of the Pizza Hut sale, and multiple compression. This Hold would upgrade to Buy if the stock breaks above its 50-day moving average and shows sustained relative strength, or if forward P/E compresses below 18x. It would downgrade to Sell if same-store sales turn negative or if the Pizza Hut sale faces significant delays. Overall, YUM is fairly valued relative to its history but slightly overvalued vs. peers, making it a hold for now.
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YUM 12-Month Price Forecast
YUM's fundamental story is compelling with accelerating revenue, expanding margins, and a transformative portfolio streamlining. However, the stock's technical weakness and premium valuation vs. peers create a disconnect that may persist until the Pizza Hut sale closes and consumer sentiment improves. The base case of a gradual recovery to the analyst target is most likely, but the bear case of continued weakness cannot be dismissed given the macro headwinds. A neutral stance is warranted until the stock shows signs of bottoming, such as a break above its 50-day moving average or a catalyst from the Pizza Hut sale. Upgrading to bullish would require sustained relative strength and confirmation of margin expansion; downgrading to bearish would require negative same-store sales or significant execution missteps.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Yum! Brands's 12-month outlook, with a consensus price target around $174.33 and implied upside of +17.9% versus the current price.
Average Target
$174.33
0 analysts
Implied Upside
+17.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$147 - $200
Analyst target range
YUM is covered by 21 analysts, with a consensus recommendation of 'Buy' (mean rating 2.23 on a 1-5 scale where 1 is Strong Buy). The average price target is $174.24, implying 17.8% upside from the current price of $147.92. The distribution shows a bullish tilt, with recent upgrades from Morgan Stanley (Overweight from Equal Weight) and maintained Buy ratings from TD Cowen, while Citigroup and Wells Fargo remain Neutral/Equal Weight. The target range spans from a low of $147.00 to a high of $200.00, a spread of 36% from low to high, indicating significant uncertainty. The high target of $200 assumes successful execution of the Pizza Hut sale, margin expansion, and sustained growth at KFC and Taco Bell, potentially driving multiple expansion. The low target of $147, just below the current price, reflects risks from consumer spending weakness, integration challenges, or a slower-than-expected recovery. The wide spread suggests that while the consensus is bullish, conviction varies, and investors should monitor catalysts closely.
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Bulls vs Bears: YUM Investment Factors
YUM presents a mixed picture: strong operational momentum with accelerating revenue, expanding margins, and a transformative portfolio streamlining via the Pizza Hut sale, but the stock is in a clear downtrend with negative relative strength and a premium valuation. The bull case rests on the Pizza Hut sale unlocking value and margin expansion driving EPS growth, while the bear case centers on consumer headwinds and execution risk. The single most important tension is whether the Pizza Hut sale and focus on KFC/Taco Bell can reignite growth and investor confidence, or if macro pressures will continue to weigh on the stock. Currently, the bull case has stronger evidence given the fundamental improvements and analyst consensus, but the technical weakness warrants caution.
Bullish
- Portfolio Streamlining via Pizza Hut Sale: YUM's $2.3 billion sale of Pizza Hut removes a drag on growth and margins, allowing focus on higher-margin KFC and Taco Bell. This is expected to boost operating margins and earnings per share, with analysts projecting 37% EPS growth next year.
- Strong Revenue Acceleration: Q1 2026 revenue grew 15.2% YoY to $2.059B, accelerating from 8.2% in Q2 2025. Core brands KFC ($879M) and Taco Bell ($797M) drove 81% of total revenue, demonstrating robust demand.
- Expanding Profit Margins: Net margin improved to 21.0% in Q1 2026 from 14.2% a year ago, while operating margin rose to 31.3% from 30.7%. The high-margin franchise model (97% franchised) supports these gains.
- Attractive Forward Valuation: Forward P/E of 19.8x is near the low end of its 5-year range (17x-44x) and below the trailing P/E of 27.1x, implying the market expects significant earnings growth. The average analyst target of $174.24 implies 17.8% upside.
Bearish
- Persistent Price Downtrend: YUM has declined 0.1% over the past year vs. the S&P 500's 18.4% gain, and sits at only 37% of its 52-week range. The 3-month decline of 9.1% and 1-month decline of 4.0% indicate sustained selling pressure.
- Premium Valuation vs. Peers: Trailing P/E of 27.1x is a 23% premium to the restaurant sector median of ~22x. While justified by higher margins, this premium leaves the stock vulnerable to multiple compression if growth disappoints.
- Challenging Consumer Environment: Rising gas prices and value-seeking behavior pressure same-store sales. Recent news highlights that $4 gas is draining wallets, which could slow traffic at YUM's brands despite their value positioning.
- Execution Risk from Pizza Hut Sale: The $2.3B sale involves integration and transition costs, and YUM China's acquisition of the Pizza Hut brand in China eliminates future royalty payments. Short-term financial impacts could weigh on earnings.
YUM Technical Analysis
YUM is in a clear downtrend, with the stock declining 0.1% over the past year while the S&P 500 gained 18.4%. The current price of $147.92 sits at 37% of its 52-week range ($137.33–$170.14), indicating it is closer to the low end and reflecting persistent selling pressure. The stock has underperformed the market by 18.5% on a relative strength basis over one year, suggesting a sustained loss of investor confidence. Short-term momentum remains negative, with a 1-month decline of 4.0% and a 3-month decline of 9.1%, both significantly worse than the S&P 500's gains of 0.3% and 4.7%, respectively. The 1-month relative strength of -4.3% confirms that YUM is weakening faster than the broader market, and the divergence between the 1-year downtrend and any short-term bounces suggests the path of least resistance is lower. Key support lies at the 52-week low of $137.33; a breakdown below that level would signal further downside and potentially test the $130 area. Resistance is at the 52-week high of $170.14, and a breakout above that would require a fundamental catalyst to reverse the trend. With a beta of 0.56, YUM is significantly less volatile than the market, meaning it tends to fall less than the S&P 500 in downturns but also rises less in rallies—a characteristic that may appeal to defensive investors but limits upside participation.
Beta
0.56
0.56x market volatility
Max Drawdown
-12.8%
Largest decline past year
52-Week Range
$137-$170
Price range past year
Annual Return
-0.1%
Cumulative gain past year
| Period | YUM Return | S&P 500 |
|---|---|---|
| 1m | -4.0% | -0.5% |
| 3m | -9.1% | +4.9% |
| 6m | -7.7% | +9.7% |
| 1y | -0.1% | +18.4% |
| ytd | -1.7% | +9.0% |
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YUM Fundamental Analysis
Revenue growth has been solid, with Q1 2026 revenue of $2.059 billion up 15.2% year-over-year from $1.787 billion in Q1 2025, accelerating from the 8.2% growth seen in Q2 2025. The revenue trajectory is positive, driven by KFC ($879M) and Taco Bell ($797M) segments, which together account for 81% of total revenue, while Pizza Hut ($253M) and Habit Burger ($130M) are smaller contributors. The sale of Pizza Hut will remove a drag, but the underlying growth of the core brands remains robust. Profitability is strong, with Q1 2026 net income of $432 million and a net margin of 21.0%, up from 14.2% in Q1 2025. Gross margin was 44.7%, slightly below the 46.8% in the year-ago quarter, but operating margin improved to 31.3% from 30.7%, reflecting operating leverage. The company is solidly profitable and margins are expanding, supported by the high-margin franchise model. The balance sheet shows a debt-to-equity ratio of -1.63 (negative equity due to share buybacks), which is typical for YUM and not a sign of distress given its strong cash flow generation. Free cash flow was $341 million in Q1 2026, and trailing twelve-month FCF is $1.649 billion, providing ample coverage for dividends ($207M paid in Q1) and debt service. The current ratio of 1.35 indicates adequate liquidity, and the company generates enough cash to fund operations and growth without external financing.
Quarterly Revenue
$2.1B
2026-03
Revenue YoY Growth
+15.2%
YoY Comparison
Gross Margin
44.7%
Latest Quarter
Free Cash Flow
$1.6B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is YUM Overvalued?
Since net income is positive, the primary valuation metric is the P/E ratio. The trailing P/E is 27.1x, while the forward P/E is 19.8x, implying the market expects earnings growth of about 37% over the next year. This gap suggests that the market is pricing in a significant earnings recovery, likely driven by the Pizza Hut sale and margin expansion. Compared to the industry average (Restaurants sector), YUM's trailing P/E of 27.1x is at a premium to the sector median of roughly 22x, representing a 23% premium. This premium is partially justified by YUM's superior net margin of 21.0% versus the industry average of ~10%, and its asset-light franchise model that generates high returns on capital. Historically, YUM's trailing P/E has ranged from 17x to 44x over the past five years. The current 27.1x is near the middle of that range, suggesting the stock is neither excessively expensive nor cheap by its own standards. However, the forward P/E of 19.8x is near the lower end of the historical band, indicating that if earnings materialize as expected, the stock could offer value.
PE
27.1x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 17x~36x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
19.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: YUM's debt-to-equity ratio of -1.63 reflects negative equity from aggressive share buybacks, which is typical for the company but leaves it with no equity cushion. However, the company generates strong free cash flow ($1.649B TTM) and has a current ratio of 1.35, indicating adequate liquidity. The Pizza Hut sale for $2.3 billion will reduce revenue but improve margins, though transition costs could temporarily pressure earnings. Revenue concentration in KFC and Taco Bell (81% of total) exposes the company to brand-specific risks, though diversification across 155 markets mitigates this. The net margin of 21.0% is high but could compress if commodity costs rise or franchisee profitability weakens.
Market & Competitive Risks: YUM's trailing P/E of 27.1x is a 23% premium to the restaurant sector median, making it vulnerable to multiple compression if growth disappoints. The stock has underperformed the market significantly, with a 1-year relative strength of -18.5%, indicating persistent selling pressure. Rising gas prices and value-seeking behavior could pressure same-store sales, as highlighted by recent news. The low beta of 0.56 means the stock is less volatile but also less likely to participate in market rallies. Competitive threats from Domino's and other QSR chains could intensify, especially if consumer spending weakens further.
Worst-Case Scenario: A prolonged consumer spending downturn, combined with execution missteps in the Pizza Hut sale or disappointing same-store sales at KFC/Taco Bell, could drive the stock to its 52-week low of $137.33, representing a 7.2% decline from the current price of $147.92. If the company also faces margin compression or a dividend cut, the stock could fall further to $130, a 12.1% decline. In a severe recession scenario, the stock could test $120, a 18.9% decline, based on historical max drawdown of 12.83% and the stock's low beta. The realistic downside from the current price is approximately -7% to the 52-week low, but could be -12% if fundamentals deteriorate.
FAQ
The key risks are: 1) Consumer spending weakness: Rising gas prices and value-seeking behavior could pressure same-store sales, as highlighted by recent news. 2) Execution risk from the Pizza Hut sale: The $2.3B sale involves transition costs and could face delays, impacting short-term earnings. 3) Valuation risk: The trailing P/E of 27.1x is a 23% premium to the sector median, leaving the stock vulnerable to multiple compression if growth disappoints. 4) Technical risk: The stock is in a clear downtrend with negative relative strength (-18.5% over 1 year), and a break below the 52-week low of $137.33 could trigger further selling. The most severe risk is a prolonged consumer downturn combined with execution missteps, which could drive the stock to $130 or lower.
The 12-month forecast is mixed, with three scenarios: Bull case (25% probability) targets $170-$200, driven by successful Pizza Hut sale and margin expansion. Base case (50% probability) targets $155-$175, assuming moderate growth and the stock recovering to the analyst average of $174.24. Bear case (25% probability) targets $137-$147, if consumer spending weakens or the sale faces delays. The most likely scenario is the base case, with the stock gradually recovering as the Pizza Hut sale closes and core brands maintain growth. The analyst consensus is Buy with an average target of $174.24, implying 17.8% upside. Key catalysts include the sale closing, same-store sales trends, and macro conditions.
YUM's trailing P/E of 27.1x is above the restaurant sector median of ~22x, suggesting a 23% premium that reflects its superior net margin of 21.0% and asset-light franchise model. However, the forward P/E of 19.8x is near the low end of its 5-year historical range of 17x-44x, implying that if earnings grow as expected (37% EPS growth next year), the stock could be undervalued. Compared to its own history, the current valuation is in the middle of the range, indicating it is neither excessively cheap nor expensive. The market is pricing in a significant earnings recovery driven by the Pizza Hut sale and margin expansion. Overall, YUM is fairly valued relative to its history but slightly overvalued vs. peers, making it a hold for now.
YUM is a good stock to buy for long-term investors seeking a defensive, income-generating holding with a 1.88% dividend yield and potential for capital appreciation. The analyst consensus is Buy with an average target of $174.24, implying 17.8% upside from the current price of $147.92. However, the stock is in a clear downtrend, having declined 0.1% over the past year vs. the S&P 500's 18.4% gain, and its trailing P/E of 27.1x is a 23% premium to the restaurant sector median. The biggest downside risk is a prolonged consumer spending downturn that could pressure same-store sales. For risk-tolerant investors, the current price near the low end of the 52-week range offers a favorable entry point, but conservative investors may want to wait for confirmation of a trend reversal or the closing of the Pizza Hut sale.
YUM is best suited for long-term investment due to its defensive business model, strong cash flow, and 1.88% dividend yield. The stock's low beta of 0.56 means it is less volatile than the market, making it a good core holding for income-oriented portfolios. Short-term trading is challenging given the persistent downtrend and negative relative strength; the stock has declined 9.1% over the past 3 months and 4.0% over the past month. For long-term investors, the current price near the 52-week low offers a favorable entry point, with a suggested minimum holding period of 3-5 years to allow the Pizza Hut sale benefits to materialize and the stock to recover. Short-term traders should wait for a trend reversal signal, such as a break above $160.
