Yum! Brands YUM
Consumer Cyclical · Restaurants · Synthos Deep Dive · 2026-07-03
The Overview
Yum! Brands owns KFC, Taco Bell, Pizza Hut, and Habit Burger. It mostly does not run the restaurants itself — local franchisees do — and Yum! collects a royalty and fee off their sales. That's a nice business: it takes little cash to grow, and it keeps a big slice of every dollar as profit.
Right now the good news is Taco Bell, which is selling a lot more (sales at established stores up 8% last quarter), and KFC, which is opening restaurants fast overseas. The weak spot is Pizza Hut, which is shrinking.
Is the stock cheap? No — it's about fairly priced, maybe a touch full. You're paying roughly $26 for every $1 the company earns, which is a premium for a business only growing sales in the high single digits. There's also a fair amount of debt. So our verdict is Watch: a solid company, but the price doesn't leave you a bargain or a cushion. Wait for a better entry.
Here's what the three scores mean in plain terms:
- Downside Risk 5/10 (middle). The business is steady and doesn't swing wildly (people eat fast food in good times and bad), but it carries real debt and the stock isn't cheap, so a stumble would hurt.
- Growth Quality 6/10 (good, not great). A clean, profitable, low-capital model — but overall sales growth is only mid-single-digit and one of its four brands is going backwards.
- Exponential Potential 3/10 (low). This is a mature giant that grows steadily; it is not going to double quickly.
The one big worry: the debt load plus a full price. If sales slip or Pizza Hut keeps sliding, both the earnings and the premium could shrink at the same time.
Putting a number on it: our fair-value estimate is $168 against a current price of $153.86 — real upside if our numbers are right.
Our summary metrics
Low beta 0.57 & recession-resilient franchise model, but 3.9× net-debt/EBITDA and 26× earnings on high-single-digit growth.
~15% forward EPS CAGR on a capital-light franchise (94% franchised, high ROIC), but Pizza Hut is shrinking and topline is only mid-single-digit.
Mature global QSR compounder — decelerating, no acceleration, $45B cap with limited room to multibag. Not an exponential.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Mature global QSR compounder — decelerating, no acceleration, $45B cap with limited room to multibag. Not an exponential.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $178 (high $190 / low $160; 19 Buy · 29 Hold · 3 Sell → Hold) — context, not our anchor |
| Valuation | 26× trailing EPS · 24× FY26E · 22× FY27E · 15× FY30E · EV/S 6.7× · EV/EBITDA 19.4× |
| Technicals | Mild uptrend — $164.73, −2% off 52-wk high, above 50/200-DMA, RSI 70 (at overbought), but lagging SPY (+9.5% vs +20.6% 12-mo) |
| Conviction | Low — 0 expert voices in the KB; call rests entirely on fundamentals + quant |
| Position sizing | If owned, a defensive 1–3% satellite; no conviction to press |
What the experts actually said
No independent expert claims in the Synthos knowledge base yet for YUM — this dive is fundamentals- and technicals-driven, not panel-driven.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $153.86, 0% above the 50-day average ($153), 1% below the 200-day average ($155) — a mixed trend. 9% below the 52-week high of $168, 11% above the 52-week low of $138.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $153.86 is currently inside the band (band $143–$158).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 53.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently above its signal line by 0.76, positive momentum.
Relative performance vs S&P 500 & its sector (XLY (sector)), set to 100 a year ago
Solid = YUM · dashed = S&P 500 · dotted = XLY (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Yum! Brands (NYSE: YUM) is one of the world's largest quick-service-restaurant (QSR) enterprises, operating and franchising four global brands: KFC (chicken), Taco Bell (Mexican-style QSR, overwhelmingly US), Pizza Hut (pizza), and The Habit Burger Grill (chargrilled burgers). The system spans ~63,000+ restaurants across ~157 countries. The model is ~94% franchised — Yum! collects franchise royalties, fees and property revenues rather than carrying the labor/food cost of running most stores itself, which is why margins and returns on capital are high and capex is light. Fiscal year ends December 31. CEO is Christopher Turner (previously CFO).
Revenue mix (FY2025, from FMP segmentation):
- By division: KFC Global $3.54B (43%) · Taco Bell Global $3.10B (38%) · Pizza Hut Global $1.01B (12%) · Habit Burger $0.57B (7%). (These are Yum's reported revenues, not franchisee system sales — system sales are many times larger.)
- By geography (FY25): US $4.53B (74% of segmented revenue) · Other outside the US and China $1.61B. Note the split: Taco Bell is a US story, while KFC's system sales are heavily international (China ~26%, Europe, Asia, Latin America), so the franchisor revenue and the underlying system-sales geography diverge.
Segment trajectory that matters: KFC revenue grew from $3.10B (FY24) to $3.54B (FY25); Taco Bell $2.86B → $3.10B; Pizza Hut is flat-to-shrinking ($1.01B → $1.01B, and Q1'26 system sales were down 6% in the US). Habit remains sub-scale. The story is "two strong engines (KFC units, Taco Bell comps), one persistent laggard (Pizza Hut)."
2. The expert thesis — why the panel is bullish (traceable)
There is no expert coverage for YUM in the Synthos knowledge base. total_claims = 0, zero net-bullish voices, zero cautionary voices. No distilled expert claim exists to cite, so this note makes no appeal to expert conviction — the verdict is derived entirely from the fundamentals, the analyst estimates, the technicals, and management's own disclosures, each labeled as such.
This matters for how you weight the call: the high-conviction Synthos names (e.g. the flagship track) are backed by a broad panel of independent voices. YUM is not one of them. It is a quant/screen-track name, and a Watch — precisely the kind of name where the honest answer is "solid business, no edge, no bargain." We will not manufacture conviction we do not have.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 5 · Moderate | Beta 0.57 and a recession-resilient, franchised model cut cyclicality — but net-debt/EBITDA 3.9× is genuine leverage, and 26× trailing on ~high-single-digit topline leaves little cushion. Negative book equity (from years of buybacks) is structural, not distress. |
| Growth Quality | 6 · Good | Capital-light franchise (ROIC ~31%, ROCE ~52% TTM), clean FCF ($1.64B, ~81% of operating cash), Taco Bell comps +8% and KFC units +7% — but overall revenue growth is only mid-single-digit and Pizza Hut is a persistent drag. Good, not elite. |
| Exponential Potential | 3 · Low | ~15% forward EPS CAGR is decelerating, not accelerating; a mature $45B global franchisor with the QSR map largely drawn. Own for compounding, not for a multibagger. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. The cases bound the range; the scores summarize them.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | Taco Bell comp momentum sustains, KFC unit growth stays ~7%, Pizza Hut stabilizes; buybacks shrink the share count. FY27E EPS beats to ~$7.75 (vs $7.44 cons); market pays a premium ~26×. | ~$205 (+24%) |
| Base (our anchor) | Estimates roughly hit — FY27E EPS $7.44; a steady mid-single-digit-topline franchise earns its historical ~22×. | ~$168 (+2%) |
| Bear | Pizza Hut drag deepens, US QSR traffic softens, FX headwind; leverage limits buyback support. FY27E EPS misses to ~$6.70; multiple de-rates to ~19×. | ~$128 (−22%) |
Synthos fair value = the base case, ~$168 (+2%), with the full $128–$205 span as the honest range. This anchor sits below the Street's $178 consensus — we give less credit to multiple expansion from an already-full 26× starting point and take the leverage and Pizza Hut drag seriously. Note the base case is essentially fair value at today's price: there is no meaningful margin of safety, which is exactly why the verdict is Watch, not Buy. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). YUM is a mature compounder with no exponential characteristics:
- Forward growth: EPS CAGR FY25→FY30E ~14.9% ($5.56 → $11.16) — respectable, and better than the topline because of franchise-margin mix and buybacks. Revenue growth is only mid-single-digit at the franchisor level.
- Acceleration (the 2nd derivative) is flat-to-negative: EPS estimates step $6.75 (FY26E) → $7.44 (FY27E) → $8.25 (FY28E) → $9.44 (FY29E) → $11.16 (FY30E) — steady ~11–15% annual growth, not accelerating. Same-store sales are healthy but this is a mature category; there is no inflection. Per our flagship philosophy we pick forward next-exponentials over trailing compounders — YUM is squarely a compounder, and a decelerating-mature one at that.
- Room to run: the global QSR map is largely drawn. Unit growth of ~5%/yr is real but incremental; at a $45B cap a 3× from here would be a ~$135B company, well above any QSR franchisor today. The runway is steady, not explosive.
- Reinvestment runway: low capex (~$0.37B, ~4.4% of revenue) and a capital-light franchise model mean cash is returned (dividends + buybacks) rather than reinvested at expanding scale — the opposite of an exponential's reinvestment flywheel.
Exponential Potential: Low (3/10). Own YUM — if at all — for durable ~mid-teens EPS compounding and a growing dividend, not for a fast multibagger. A small, accelerating QSR concept would score far higher; YUM's size and maturity cap it.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $8.21B, +8.8% (FY24 $7.55B, +6.7% on FY23 $7.08B). Solid mid-single-to-high-single-digit franchisor growth; not explosive.
- Quarterly trajectory: Q1'25 $1.79B → Q2 $1.93B → Q3 $1.98B → Q4 $2.51B → Q1'26 $2.06B (+15.2% YoY vs Q1'25's $1.79B). Q1'26 EPS $1.55 GAAP / $1.50 ex-items (+15% YoY).
- Margins: gross 45.7% TTM, EBITDA 34.4% TTM, operating ~31.5%, net 20.5% TTM — strong for a restaurant enterprise, a direct result of the franchised model.
- Earnings: net income $1.56B FY25 (EPS diluted $5.56), up from $1.49B FY24. TTM net income per share ~$6.27 (reflecting a strong Q1'26).
- Cash flow: operating CF $2.01B, capex ~−$0.37B, FCF $1.64B FY25 (up from $1.43B) — ~81% FCF/operating-cash conversion. Capex-light is the whole point of the model.
- Balance sheet: total debt $11.9B, net debt $11.2B, net-debt/EBITDA ~3.9× — meaningfully levered. Book equity is negative (−$7.3B) — this is not distress; it is the arithmetic result of over a decade of buybacks and the 2016 China/2018 restaurant spin-offs, common among heavily-franchised restaurant companies. Interest coverage ~5.3×; the debt is serviceable but it is real, and it caps financial flexibility.
6. Valuation — priced in or room?
YUM is fair-to-full, not cheap. Trailing: 26× EPS, 6.7× EV/sales, 19.4× EV/EBITDA. Forward, on live consensus, the P/E steps down to 24× (FY26E) → 22× (FY27E) → 15× (FY30E) — the multiple compresses as EPS compounds, but it starts from a full base for a high-single-digit-topline business. The PEG is ~1.1× trailing / ~2.6× on the forward blend (FMP) — i.e., you are not being paid a discount for the growth. A franchise this steady deserves a premium to the market, but at 26× there is little room for multiple expansion, so the return is roughly "grow into the price." Street targets (context): consensus $178, high $190, low $160; grades split 19 Buy · 29 Hold · 3 Sell → Hold. Our $168 base FV sits below consensus because we underwrite less multiple expansion and weight the leverage and Pizza Hut drag. Not a value buy; a fairly-priced-quality-compounder that needs a pullback to become interesting.
7. Technicals (from the FMP tech block)
- Trend: mild up. $164.73 sits above the 50-DMA ($153.84) and 200-DMA ($153.57), with the 50 marginally above the 200 — a constructive but not powerful posture. MACD +2.13 (mildly positive).
- Location: −2.0% off the 52-week high ($168.16), +19% off the 52-week low ($138.21) — near the top of its range, shallow max drawdown (−2.0% from peak).
- Momentum: RSI(14) ~70 — right at the overbought threshold. This is a caution flag for entry timing: the stock is extended short-term.
- Relative strength (the tell): YUM +9.5% 12-mo vs SPY +20.6% and QQQ +30.3% — it has materially lagged both the market and the Nasdaq over the past year (also −6% relative over 3 months: +7.2% vs SPY +13.7%). This is a defensive laggard, not a leader.
- Read: technicals are constructive on trend but flash two cautions — RSI at overbought and persistent underperformance vs the market. No urgency to chase near highs; a pullback toward the ~$154 moving averages would be a far better risk/reward entry.
8. Moat & competitive position
YUM's moat is the franchise flywheel + global brand equity: three iconic brands (KFC, Taco Bell, Pizza Hut) with decades of consumer recognition, a ~94%-franchised model that scales unit growth on franchisee capital, and increasingly a digital/AI edge — management flagged record 63% digital system-sales mix (~$11B digital sales) in Q1'26. The moat is real but not impregnable: QSR is intensely competitive, switching costs are zero, and success is brand- and execution-specific (Taco Bell strong, Pizza Hut weak) rather than a company-wide monopoly. The KFC international footprint (esp. China, via the separately-listed Yum China) is a genuine growth differentiator.
Peer set (FMP-supplied, market cap): the direct restaurant comps are Chipotle (CMG) $45.4B, Restaurant Brands International (QSR) $25.9B, and Yum China (YUMC) $14.6B; the rest of the FMP peer list (Carnival, Copart, D.R. Horton, eBay, Flutter, Las Vegas Sands) are same-sector "Consumer Cyclical" names, not true QSR competitors. Against CMG and QSR, YUM offers more geographic and brand diversification and a fatter dividend, but slower comp growth than Chipotle. YUM's ~26× multiple is a premium to QSR and roughly in line with, or below, CMG's growth-premium multiple.
9. Management, capital allocation & guidance
- Capital allocation: classic mature-franchise playbook — modest capex (~$0.37B), a growing dividend ($2.92/sh, ~1.8% yield, ~46% payout) and buybacks ($552M in FY25) that shrink the share count and drive negative book equity. Net-debt/EBITDA ~3.9× means the buyback is debt-supported; appropriate given the stable cash flows, but it limits flexibility in a downturn.
- Insider activity: the most recent Form 4s (2026-07-01) show routine executive sales tied to option/SAR exercises — KFC Division CEO Mezvinsky, Pizza Hut CEO Powell (6,001 shares @ $160.42), and CEO Turner (a small 250 shares @ $160.42). These read as normal comp-driven diversification at a share price near 52-week highs, not a discretionary bearish cluster.
- Management's own guidance (half-weighted — their own book): the SEC 8-K earnings release (Q1'26, filed 2026-04-29) restates Yum's long-term growth algorithm, first set in 2022: ~5% unit growth, ~7% system-sales growth (ex-FX), and at least 8% core-operating-profit growth "over an extended period, on average." Management did not issue specific FY26 revenue/EPS guidance in the release (QSR companies typically guide to the algorithm rather than point EPS). Q1'26 actuals — worldwide system sales +6% ex-FX, units +5%, Taco Bell comps +8%, KFC units +7%, Pizza Hut US −6% — were broadly on-algorithm ex Pizza Hut. Treat the algorithm as management's self-interested framing; the analyst consensus (§5–6) is our primary forward anchor.
10. Catalysts & what to watch
- Next earnings: 2026-07-30 (Q2'26; Street EPS $1.61, revenue ~$2.19B). Key lines: Taco Bell same-store sales (can it sustain +8%?), KFC unit growth, and any Pizza Hut stabilization.
- Pizza Hut inflection: the single biggest swing factor for the bull case — US system sales were −6% in Q1'26. A return to flat-to-positive would re-rate the story.
- Taco Bell momentum: the primary US engine; deceleration here would hit both estimates and the multiple.
- KFC international / China: the unit-growth story; watch China and emerging-market system sales.
- Digital/AI mix: management is leaning on tech (63% digital mix) as a margin/efficiency lever — evidence it converts to core-operating-profit growth.
- Buyback pace vs leverage: whether YUM keeps buying at 3.9× net-debt/EBITDA.
Thesis tripwires (what would change the call): two consecutive quarters of Taco Bell comp deceleration; Pizza Hut drag widening rather than stabilizing; net-debt/EBITDA drifting above ~4.5×; or the multiple expanding toward ~30× (which would push us to a clearer Avoid on valuation).
11. Key risks
- Leverage (structural): net-debt/EBITDA ~3.9× and negative book equity limit financial flexibility; a downturn plus a debt-funded buyback is a fragile combination if cash flows wobble.
- Valuation / de-rating: 26× trailing on high-single-digit topline leaves no margin of safety; a comp miss compresses earnings and multiple together.
- Pizza Hut secular drag: a persistently weak brand (US system sales −6% in Q1'26) is a real, ongoing headwind to consolidated growth.
- Cyclicality / consumer: although QSR is relatively recession-resilient, low-income-consumer pressure and QSR price fatigue can dent traffic.
- FX & international mix: heavy international system-sales exposure (KFC) makes reported results sensitive to the dollar.
- No expert coverage / low conviction: the Synthos KB has zero voices on this name — there is no independent qualitative signal reinforcing (or challenging) the quant read. That absence is itself a reason to size small.
12. Verdict, position sizing & monitoring
Watch. YUM is a genuinely good business — a capital-light, high-ROIC global franchisor with two strong engines (Taco Bell comps, KFC units), clean free cash flow ($1.64B), and a growing dividend. But the price already reflects that quality: at ~26× trailing earnings for a high-single-digit-topline, 3.9×-levered business with a structurally weak Pizza Hut, our base-case fair value (~$168) sits essentially at the current price and below the Street's $178. There is no margin of safety, the stock is at overbought RSI near 52-week highs, and it has lagged the market badly over the past year. Nothing here is broken — it simply is not cheap enough, and there is no expert conviction to lean on.
- Sizing: if owned, a defensive 1–3% satellite for the dividend and steady compounding — not a position to press. New money is better deployed on a pullback toward the ~$154 moving averages.
- Monitoring: re-underwrite on the §10 tripwires; formal re-score each earnings print. Upgrade to Buy — Tactical would require either a ~10–15% price pullback (restoring margin of safety) or a clear Pizza Hut inflection.
- Single biggest risk: leverage meeting a full multiple on mid-single-digit growth — a same-store-sales stumble compresses earnings and valuation at once.
This verdict is logged as a tracked Synthos call as of 2026-07-03 at $164.73.
Provenance & disclosures
- Traceability: 0 KB claims, breadth 0 — there is no expert coverage for YUM in the Synthos knowledge base. This note cites no
claim_ids because none exist; the verdict is explicitly fundamentals- and quant-driven. Fabricated conviction is structurally impossible (claim-ID reconciliation). - Data as-of: fundamentals 2026-03-31 (Q1'26) · estimates & prices 2026-07-03 · management guidance from the SEC 8-K earnings release filed 2026-04-29. Forward figures are analyst consensus (FMP), labeled as estimates.
- Management caveat: the long-term growth algorithm in §9 is management's own framing (half-weighted by design); it is not company point-guidance for FY26.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").