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Yum Brands Inc - Stock Quote YUM

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Morningstar's Yum Brands Inc Stock Analysis

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Consumer Resilience and International Strength Encouraging for Yum Brands; Shares Slightly Cheap

Sean Dunlop Equity Analyst

Analyst Note

| Sean Dunlop |

Wide-moat Yum Brands posted mixed first-quarter results, with sales ($1.55 billion) and adjusted earnings ($1.05) clocking in below our forecasts for $1.69 billion and $1.21, respectively. This was exclusively driven by exogenous events—sales softness in China attributable to omicron-induced lockdowns and a modest profit drag from suspended Russian operations—and the long-term prospects of the business continue to align with our expectations. As we offset near-term pressure in China, the (probable) loss of about 3% of operating income from those Russian stores, and better-than-expected unit growth figures, we expect little impact to our $124 fair value estimate. Shares look slightly cheap at current market prices. 

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Yum Brands Inc's Company Profile

Business Description

Yum Brands is a U.S.-based restaurant operator featuring a portfolio of four brands: KFC (26,930 global units), Pizza Hut (18,380 units), Taco Bell (7,790 units), and The Habit Burger (310 units) at year-end 2021. With $58 billion in 2021 systemwide sales, the firm is the second-largest restaurant company in the world, behind McDonald’s ($112 billion) but ahead of Restaurant Brands International ($35 billion) and Starbucks ($25 billion). Yum is 98% franchised, with the largest franchisee, Yum China, created via a 2016 spinoff transaction (after which Yum China agreed to pay 3% royalties to Yum Brands in perpetuity). Yum is the newest evolution of Tricon Brands, formerly a division of PepsiCo, and generates the bulk of its revenue from franchise royalties and marketing contributions.

Contact
1441 Gardiner Lane
Louisville, KY, 40213
T +1 502 874-8300
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 36,000

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