- Price
- $137.73 → $136.34(−1.0%)
- Discount
- 11.1% → 12.0%(+0.9 pts)
- Balance sheet
- Yum had a shareholders' deficit of $7.1 billion at June 30, 2026. The reason is that, for years, it has used debt to fund large buybacks and dividends. It targets net debt of about 4.0 times EBITDA and adds debt as profit grows. Debt was about $12.3 billion at June 30, 2026, in four layers. The first layer is $4.3 billion of securitization notes, secured by US Taco Bell franchise royalties. A special-purpose subsidiary (Taco Bell Funding) holds them. The second is a secured bank credit agreement. Under it, Yum has a $488 million Term Loan A, a $1.42 billion Term Loan B and $675 million drawn on a $1.5 billion revolver. The third is $750 million of subsidiary unsecured notes due June 1, 2027. The fourth is $4.55 billion of unsecured notes at the parent. After swaps, about 96% of the term debt had a fixed rate, at an average of about 4.5%. Net debt of about $11.6 billion was about 3.9 times EBITDA of about $2.95 billion over the 12 months to June 2026. First-half 2026 operating profit of $1.30 billion covered net interest of $257 million about 5 times. The main near-term issue is a springing maturity. Yum must repay or refinance at least $500 million of the June 2027 subsidiary notes 91 days before they mature. If it does not, the Term Loan A and the revolver also come due. Thus the balance sheet showed the bank loans as short-term debt. Ratings are below investment grade (BB+ at S&P, Ba2 at Moody's), and cash was $674 million. Yum completed the sale of Pizza Hut on September 1, 2026, for about $2.3 billion of expected net proceeds. The proceeds repay the revolver and fund most of a $4 billion buyback program to June 2028. Thus the debt supports buybacks, but it leaves little room if Taco Bell profit falls.
As of 2026-06-30.
- Checkpoints
- Sep 1, 2026: Pizza Hut sale to LongRange Capital completes. Passed. Watch: Closing of both Pizza Hut sales with about $2.3 billion of net proceeds passes; a failed or delayed closing fails. Outcome: Yum completed the sale on September 1, 2026, after the Yum China part closed on August 7, for $2.7 billion in total plus an earn-out of up to $75 million.
Oct 30, 2026 (estimate): Q3 2026 results: Taco Bell recovery after the outbreak. Pending. Watch: Taco Bell US same-store sales that improve each month to positive in October, and a Taco Bell US margin within 19% to 21%, pass; a deeper decline or a lower margin fails.
Mar 2, 2027: Refinance June 2027 subsidiary notes before springing maturity. Pending. Watch: Repaying or refinancing at least $500 million of the $750 million notes by this date at a reasonable rate passes; a missed date, which makes the bank loans come due, fails.
Apr 2027 (estimate): Q1 2027 results: Taco Bell US same-store sales positive. Pending. Watch: Positive Taco Bell US same-store sales and KFC unit growth of 5% or more outside the US pass; negative Taco Bell sales fail.