Value
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.8 |
| P/S | 7.1 |
| EV/EBITDA | 1.5 |
| Fwd P/E | 5.9 |
| PEG | 4.6 |
| Analyst target | 5.0 |
- ▸Forward P/E: 22.0x
- ▸PEG: 1.90
YUM · Why this verdict
Why Yum! Brands (YUM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Yum! Brands delivers consistent earnings growth through a high-quality franchise model with strong margins and cash generation, but the stock trades near its analyst price target, leaving minimal near-term upside for new buyers.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business reports 20% net margins and a Piotroski F-Score of 8/9, but free cash flow covers only 73% of net income, a below-expected conversion rate that warrants monitoring. Quality breakdown | Free cash flow conversion improves toward 90% of net income over the next 12 months as capital spending normalizes. | →Stable |
| CounterA 73% free-cash-flow-to-net-income ratio in a franchise-heavy model raises questions about sustainability of the quality score and whether working capital pressures are building. | ||
At the current price of $154.67, the stock sits within 1.4% of the consensus analyst price target of $156.80, leaving an unfavorable reward-to-risk ratio of 0.33 and virtually no margin of safety. Targets | Analyst consensus price target rises above $165 over the next 12 months as earnings growth re-rates the stock higher. | →Stable |
| CounterWith only 1.4% upside to target and a 4.2% downside to the stop-loss level, the asymmetry is structurally poor and may not improve unless analysts raise targets materially. | ||
Yum! Brands has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 5.8%, reflecting a durable franchise model that generates predictable cash flows above analyst expectations. Earnings | Earnings beat rate remains above 75% over the next four quarters, with average surprise above 4%. | ↓Deteriorating |
| CounterThe single miss quarter (-1.34% surprise) and unknown forward guidance create uncertainty about whether the beat streak reflects true operational strength or easy comparables. | ||
The stock shows a golden cross setup with RSI at 53 and a bullish MACD reading, placing it above all key moving averages with volume accumulation confirmed by a rising on-balance volume indicator. Momentum breakdown | Price holds above the 200-day moving average and RSI remains above 50 over the next six months, confirming continued positive momentum. | →Stable |
| CounterA momentum score of 7.6 is driven partly by volume indicators; if the stock stalls near its analyst target, technical support could erode quickly with the limited upside acting as a ceiling. | ||
The business reports 20% net margins and a Piotroski F-Score of 8/9, but free cash flow covers only 73% of net income, a below-expected conversion rate that warrants monitoring.
→StableQuality breakdown
- Expectation
- Free cash flow conversion improves toward 90% of net income over the next 12 months as capital spending normalizes.
CounterA 73% free-cash-flow-to-net-income ratio in a franchise-heavy model raises questions about sustainability of the quality score and whether working capital pressures are building.
At the current price of $154.67, the stock sits within 1.4% of the consensus analyst price target of $156.80, leaving an unfavorable reward-to-risk ratio of 0.33 and virtually no margin of safety.
→StableTargets
- Expectation
- Analyst consensus price target rises above $165 over the next 12 months as earnings growth re-rates the stock higher.
CounterWith only 1.4% upside to target and a 4.2% downside to the stop-loss level, the asymmetry is structurally poor and may not improve unless analysts raise targets materially.
Yum! Brands has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 5.8%, reflecting a durable franchise model that generates predictable cash flows above analyst expectations.
↓DeterioratingEarnings
- Expectation
- Earnings beat rate remains above 75% over the next four quarters, with average surprise above 4%.
CounterThe single miss quarter (-1.34% surprise) and unknown forward guidance create uncertainty about whether the beat streak reflects true operational strength or easy comparables.
The stock shows a golden cross setup with RSI at 53 and a bullish MACD reading, placing it above all key moving averages with volume accumulation confirmed by a rising on-balance volume indicator.
→StableMomentum breakdown
- Expectation
- Price holds above the 200-day moving average and RSI remains above 50 over the next six months, confirming continued positive momentum.
CounterA momentum score of 7.6 is driven partly by volume indicators; if the stock stalls near its analyst target, technical support could erode quickly with the limited upside acting as a ceiling.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 10.0 |
| Gross margin | 5.1 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 2.4 |
| FCF quality | 3.0 |
| Moat | 6.2 |
| Piotroski F | 6.7 |
- ▸Strong margins: 25%
- ▸Earnings quality RED FLAG: 38% FCF/NI
Growth
7.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.5 |
| EPS growth | 10.0 |
Momentum
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.3 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 7.0 |
| Volume | 1.9 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA (recent, shallow — too early to call)
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 6.9 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider selling — $2,006,493 (0.005% of mkt cap)
Peer rank
6.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.3 |
| quality rank | 9.3 |
| growth rank | 7.3 |
- ▸Best-in-class margins
Technical
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.3 |
| support resistance | 2.3 |
| 52w position | 7.7 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 5.8 |
| volatility | 6.9 |
| put call | 2.9 |
| implied vol | 6.2 |
| max pain risk | 3.0 |
| beta | 9.7 |
- ▸Elevated put/call: 1.56
- ▸Above max pain $100
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 4.6 |
| dividend safety | 6.5 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:4.6>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- ASYMMETRY:0.2<1.5@spot
- DEATH_CROSS:HARD_BLOCK
- EARNINGS_PROXIMITY:5d<=7d
Warning (2)
- MOMENTUM:4.6<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.23
Upside
+2.3%
Downside
9.9%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 67
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.2<1.5@spot, DEATH_CROSS:HARD_BLOCK, EARNINGS_PROXIMITY:5d<=7d) reinforce the read. Current asymmetry R:R is 0.23 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.8, Quality at 6.7, and Sentiment at 6.6; the weakest are Technical at 4.4, Momentum at 4.6, and Insider at 5.0. The V9 engine flagged 3 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 0.23 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Franchise Earnings Beat Streak
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P2High Quality Margins Cash Conversion
Trip ifFree cash flow conversion drops below 60% of net income for 2 consecutive quarters.
- P3Valuation At Analyst Target
Trip ifStock price rises above $158, exceeding the analyst target by more than 1%, signaling overextension.
- P4Momentum And Technical Setup
Trip ifRSI falls below 40 and price drops below the 200-day moving average for more than 10 consecutive trading days.