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Louisville, Kentucky-based Yum! Brands, Inc. (YUM) develops, operates, and franchises quick-service restaurants. Valued at a market cap of $43.1 billion, the company exercises store-level franchise and master franchise programs to grow its businesses. Its KFC, Pizza Hut, and Taco Bell brands are global leaders in the chicken, pizza, and Mexican-style food categories.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and YUM fits the label perfectly, with its market cap exceeding this threshold. The company’s key strengths lie in its massive global footprint, with over 57,000 restaurants in more than 155 countries, supported by a predominantly franchised business model that ensures stable revenue streams with low operational risks. Its strong brand recognition, digital transformation initiatives, and continued investment in menu innovation give it a competitive edge over others.
This fast food company touched its 52-week high of $163.30 recently on Mar. 7 and is currently trading 5.5% below it. Shares of YUM have rallied 11.4% over the past three months, considerably outpacing the broader Consumer Discretionary Select Sector SPDR Fund’s (XLY) 15.8% dip during the same time frame.
In the longer term, YUM has soared 9.7% over the past 52 weeks, outpacing XLY’s 8.9% return. Moreover, on a YTD basis, the stock is up 15.1%, compared to XLY’s 12% downtick over the same time frame.
To confirm its bullish trend, YUM has been trading above its 200-day and 50-day moving averages since early February.
On Feb. 6, YUM's shares surged 9.7% following its strong Q4 earnings release. The company posted adjusted EPS of $1.61 and revenue of $2.4 billion, both exceeding expectations. Additionally, net income grew 27.8% year-over-year, reflecting solid financial performance.
Adding to the positives, the company reported progress in the digital space. It enhanced its digital ecosystem with the launch of Byte by Yum!, a proprietary SaaS platform designed to streamline restaurant operations through integrated technology solutions. Moreover, YUM saw a robust increase in worldwide system sales, reflecting solid contributions from the KFC and Taco Bell divisions. It opened 1,804 gross units in the quarter. leading to a 5% annual unit growth, further bolstering investor confidence.
YUM’s outperformance looks even more pronounced when compared to its rival, Domino's Pizza, Inc.’s (DPZ) 3.3% decline over the past 52 weeks and 4.2% gain on a YTD basis.
Looking at YUM’s recent outperformance relative to its broader sector, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 27 analysts covering it.
As of writing, the company is trading above its mean price target of $154.12, while its Street-high price target represents a modest 19.8% premium to its current levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
