- Price
- $137.34
- Fair value
- $155.00
- Discount
- 11.4%
- Uncertainty
- Low
- LSEG rating
- 2.41
- Moat
- Wide
- Next earnings
- 2026-11-02
- Next earnings is estimate
- No
- Company name
- Yum! Brands
- Sector
- Restaurants
- About
- Yum! Brands owns KFC, Taco Bell, and Habit Burger & Grill. It has more than 64,000 restaurants in about 155 countries. Franchisees run about 97% of them. Yum makes most of its money from franchise fees and royalties, which are a percentage of each restaurant's sales. So franchisees pay most of the cost to build and run the stores. KFC is the biggest brand by store count, with about 34,700 restaurants, mostly outside the US. Taco Bell is the most profitable brand, and most of its sales come from the US. Yum also builds its own restaurant software, called Byte by Yum!, for ordering, kitchens, and delivery. Digital orders were 61% of sales in Q2 2026. Yum sold Pizza Hut in 2026: Pizza Hut in Mainland China went to Yum China, and the rest of Pizza Hut went to the private equity firm LongRange Capital.
- Thesis
- YUM trades around $137.34, about 11% below the analysts' $155.00 fair value estimate. The market worries about three things. First, a multistate Cyclospora outbreak linked to lettuce hit Taco Bell in July 2026, and Taco Bell US same-store sales fell 2% in the weeks after it. Taco Bell makes most of Yum's profit, so investors want proof that the recovery lasts. Second, KFC same-store sales grew only 2% in Q2 2026, and Yum no longer reports KFC US sales on their own. Third, Yum carries about $11.5 billion of debt with a below-investment-grade credit rating. But the rest of the business keeps growing. Excluding Pizza Hut, system sales grew 7% in Q2 2026, from 6% more restaurants and 4% higher same-store sales. Before the outbreak, Taco Bell US same-store sales grew 8% in Q1 and 7% in Q2. Selling Pizza Hut removes Yum's weakest brand. Yum plans to use about $2.3 billion of net proceeds to pay down debt and buy back stock, under a new $4 billion buyback. Management kept its long-term plan: about 5% more restaurants each year, about 7% system sales growth, and at least 8% core operating profit growth. If Taco Bell traffic recovers and KFC keeps opening stores abroad, the gap to fair value can close.
- Risks
- Taco Bell makes most of Yum's profit. The July 2026 Cyclospora outbreak pushed its US same-store sales down 2% in the weeks after. If customers stay away longer than expected, Yum's profit growth slows.
Yum has about $11.5 billion of debt and a below-investment-grade credit rating (BB+ at S&P, Ba2 at Moody's). It targets debt of about 4 times EBITDA while it spends $4 billion on buybacks. This leaves less room if sales drop.
KFC same-store sales grew only 2% in Q2 2026, and Yum no longer reports KFC US sales on their own. KFC's growth depends more and more on new stores outside the US.
Lower-income customers are cutting back on fast food, and weight-loss drugs such as GLP-1s can reduce how much people eat out. Both can slow traffic at Yum's brands.
Yum still provides its Byte by Yum! software to Pizza Hut after the sale, and part of the price depends on an earn-out through 2030. The separation adds some short-term complexity.
- Recent events
- 2026-08-07: Yum China completed its purchase of the Pizza Hut brand in Mainland China from Yum! Brands.
2026-07-30: Yum reported Q2 2026 results. Revenue was $2.17 billion, up 12% from last year. Adjusted EPS was $1.62. Excluding Pizza Hut, system sales grew 7% and core operating profit grew 8%. Taco Bell US same-store sales grew 7%, and KFC same-store sales grew 2%.
2026-07-30: Management said Taco Bell US same-store sales were down 2% in Q3 through July 27, after the Cyclospora outbreak, but that the decline was getting smaller. It expects Taco Bell's Q3 restaurant margin to be 19% to 21%.
2026-07-17: A multistate Cyclospora outbreak, traced to lettuce from a supplier, was linked to Taco Bell restaurants. Taco Bell traffic dropped, and YUM shares fell about 9% in mid-July.
2026-06-16: Yum agreed to sell Pizza Hut for $2.7 billion in total: Pizza Hut in Mainland China to Yum China for $1.2 billion, and the rest of Pizza Hut to LongRange Capital, plus an earn-out of up to $75 million. The board also approved a new $4 billion share buyback.
2026-04-29: Yum reported Q1 2026 results. Revenue was $2.06 billion and adjusted EPS was $1.50, up 15% from last year. Taco Bell same-store sales grew 8%.
2025-11-04: Yum started a review of strategic options for Pizza Hut, after Pizza Hut same-store sales fell for most of 2025.
2025-10-01: Chris Turner, formerly Yum's CFO and Chief Franchise Officer, became CEO. He replaced David Gibbs, who retired.