Company Overview
Yum! Brands, Inc. operates as a global developer, operator, and franchisor of traditional and non-traditional quick service restaurants, with its footprint extending across the United States, China, and international markets. The company functions within the Consumer Cyclical sector and specifically within the Restaurants industry, classifying it as a business whose performance is sensitive to consumer discretionary spending habits. This entity manages a massive operational scale, evidenced by a market capitalization of $43.10B, an annual revenue of $8.21B, and an employed workforce of 49,000 individuals. These valuation and revenue figures indicate that the company holds a dominant position within the quick service restaurant landscape, serving as a significant player in the global food service economy.
Financial Health
The financial performance of Yum! Brands is characterized by a trailing twelve-month revenue of $8.21B, generating a net income of $1.56B and an EBITDA of $2.91B. The substantial gap between the $8.21B revenue and the $1.56B net income reveals a cost structure where roughly 81% of top-line revenue is consumed by operating expenses, taxes, and interest before reaching the bottom line. Despite these operating costs, the company maintains a robust free cash flow of $1.31B, which provides significant financial flexibility to fund capital expenditures, service debt, or pursue strategic acquisitions. Profitability is further detailed by three key margins: a gross margin of 46.2%, an operating margin of 31.9%, and a profit margin of 19.0%, indicating efficient control over cost of goods sold and operational overhead relative to sales. On the balance sheet, the company holds $709.00M in cash against total debt of $13.19B, while the debt-to-equity ratio is listed as N/A, suggesting a leveraged capital structure typical for asset-heavy franchise models rather than a conservative cash-rich stance. Liquidity is supported by a current ratio of 1.35, which indicates the company possesses sufficient current assets to cover its short-term liabilities with a comfortable buffer. Management effectiveness is highlighted by a Return on Assets of 22.6%, while the Return on Equity is reported as N/A, reflecting the specific accounting treatment of the company's equity structure.
Valuation Assessment
Market participants value Yum! Brands with a trailing P/E ratio of 28.02 and a forward P/E of 20.78. The notable difference between these two metrics implies that the market expects earnings growth to accelerate in the future, as investors are willing to pay a lower multiple for expected future earnings compared to historical performance. The price-to-book ratio stands at -5.87, a figure that indicates the market is pricing the company significantly above its book value, reflecting the intangible value of its franchise agreements and brand equity rather than tangible assets alone. Alternative valuation metrics provide further context, with a price-to-sales ratio of 5.25 and an EV/EBITDA of 18.91, suggesting the stock is priced at a premium relative to its sales and earnings before interest, taxes, depreciation, and amortization. In terms of trading range, the stock has seen a 52-week high of $169.39 and a 52-week low of $137.33, meaning the current price sits within a defined volatility band rather than at an extreme historical peak or trough. The beta of 0.64 indicates that the stock exhibits lower price volatility relative to the broader market, moving less aggressively than the overall market index during periods of fluctuation.
Growth & Income
The company's growth trajectory is defined by a revenue growth rate of 6.5% and an earnings growth rate of 27.7%. The fact that earnings are growing at a pace more than four times faster than revenue implies significant operational leverage and expanding profit margins rather than simply top-line volume expansion. Regarding income generation, the company offers a dividend yield of 1.9% with a payout ratio of 51.2%, indicating that the dividend payments are covered well by earnings and appear sustainable given the current profitability levels. This balance between returning capital to shareholders through dividends and maintaining a payout ratio under 60% allows the firm to retain sufficient earnings for reinvestment. The overall profile combines moderate revenue expansion with robust earnings acceleration and a reliable, sustainable dividend stream, positioning the asset for steady income and capital appreciation potential based on historical performance metrics.