Analysts have raised their fair value estimate for Yum! Brands from $158.52 to $161.40 per share. They cite improving profit margins and continued strong performance from key business segments as reasons for the upward revision.
Analyst Commentary
Analysts have offered a balanced perspective on Yum! Brands' outlook, noting both areas of strength and potential risks tied to the company’s valuation and growth trajectory. The following summarizes their views:
Bullish Takeaways
- Strong performance in core segments, notably Taco Bell US and KFC International, continues to underpin overall profit growth. Together, these segments comprise roughly 80% of the company’s operating profit in recent years.
- The company’s track record of outpacing fast-food peers, especially with Taco Bell, supports ongoing robust sales growth and improved operating leverage.
- Recent margin improvements reflect more efficient execution and profitability, positively affecting fair value estimates.
Bearish Takeaways
- Expectations for same-store sales growth are already elevated. Consensus estimates call for sustained outperformance that may be difficult to achieve consistently.
- Valuation is seen as balanced, which limits near-term upside potential unless there are significant positive surprises or market shifts.
- Any slowdown in core brands or underperformance versus ambitious targets could expose the stock to downside risk, given its current pricing.
What's in the News
- Taco Bell is reevaluating the deployment of voice AI at more than 500 drive-through locations after customer complaints about glitches and delays. Executives are emphasizing a cautious and adaptive approach to the technology (Wall Street Journal).
- Ranjith Roy has been appointed as Chief Financial Officer of Yum! Brands, effective October 1, 2025. He will succeed Chris Turner, who will assume the role of Chief Executive Officer on the same date.
- Between April and June 2025, Yum! Brands repurchased 740,000 shares. This brings total buybacks under the current authorization to 5.21 million shares and $726.27 million.
Valuation Changes
- The Fair Value Estimate has risen slightly from $158.52 to $161.40 per share.
- The Discount Rate has fallen moderately from 9.25% to 9.11%.
- The Revenue Growth Expectation has decreased slightly from 6.34% to 6.26%.
- The Net Profit Margin has improved from 21.38% to 22.01%.
- The Future P/E Ratio has edged down from 27.65x to 27.30x.
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.