About YUM BRANDS INC
YUM! Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates through four segments: the KFC Division, the Taco Bell Division, the Pizza Hut Division, and the Habit Burger Grill Division. The company operates restaurants under the KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill brands, which specialize in chicken, pizza, made-to-order chargrilled burgers, sandwiches, Mexican-style food categories, and other food products. As of December 31, 2021, it had 26,934 KFC units; 18,381 Pizza Hut units; 7,791 Taco Bell units; and 318 The Habit Burger Grill units in approximately 157 countries and territories. The company was formerly known as TRICON Global Restaurants, Inc.
and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was incorporated in 1997 and is headquartered in Louisville, Kentucky.
YUM operates in the Retail Trade | Restaurants, Hotels, Motels | headquartered in Louisville, Kentucky | approximately 36,000 employees | led by CEO David W. Gibbs.
The $42.6B question: What happens when a company this good becomes this expensive?
The American consumer has always been a fickle beast — spending freely in good times and retreating in bad. YUM BRANDS INC has spent decades learning to read those moods, and right now, the reading is surprisingly sanguine.
At $42.6B in market capitalization, YUM BRANDS INC (YUM) currently ranks #2 in our quantitative model, with a composite score of 80.8/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives YUM the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 65/100 | 30% | Strong |
| Value | 94/100 | 15% | Attractive |
| Momentum | 76/100 | 25% | Accelerating |
| Investment | 78/100 | 10% | Growing |
| Stability | 88/100 | 10% | Fortress |
| Short Interest | 10/100 | 10% | High shorts |
The quality score of 65/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: -25.0%
- Net Margin: 20.1%
- Gross Margin: 68.6%
These aren't just good numbers. They're the kind of numbers that make YUM a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like YUM."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. YUM is quality defined.
- Momentum is real. With a momentum score of 76/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 29.4x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
YUM BRANDS INC is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, YUM is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 80.8/100 | Rank: #2 of 3,571 stocks
Sector: Consumer Discretionary
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.
