Value
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.2 |
| P/S | 6.9 |
| EV/EBITDA | 1.1 |
| Fwd P/E | 6.3 |
| PEG | 4.6 |
| Analyst target | 4.0 |
- ▸Forward P/E: 20.4x
- ▸PEG: 1.93
YUM · Why this verdict
Why Yum! Brands (YUM) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.7/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | ↓Deteriorating |
| 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%. | →Stable |
| 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. | ↑Improving |
| 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.
↓DeterioratingTargets
- 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.
→StableEarnings
- 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.
↑ImprovingMomentum 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
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 10.0 |
| Gross margin | 5.1 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 2.6 |
| FCF quality | 5.5 |
| Moat | 6.2 |
| Piotroski F | 8.9 |
- ▸Strong margins: 20%
- ▸Earnings quality warning: 73% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
8.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.3 |
| EPS growth | 10.0 |
Momentum
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.6 |
| MACD | 3.8 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.5 |
- ▸Uptrend pullback (RSI 39) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.2 |
| Analyst rating | 7.5 |
| Price target | 6.6 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $2,908,093 (0.007% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.5 |
| quality rank | 9.4 |
| growth rank | 8.4 |
- ▸Best-in-class margins
- ▸Industry growth leader
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.5 |
| support resistance | 5.2 |
| 52w position | 8.5 |
| gap | 3.0 |
- ▸Extreme gap up (6.6%) - may pull back
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.2 |
| days to cover | 7.6 |
| volatility | 4.5 |
| put call | 10.0 |
| implied vol | 7.6 |
| beta | 9.6 |
| news risk | 4.0 |
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
| dividend safety | 7.5 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 0 days
- ▸Dividend aristocrat: 2.0% yield
How the verdict was assembled
Engine trigger
News gate: 2 distinct critical events (2 MATERIAL_RISK articles).
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|NEWS_GATE:BLOCKEDPassed (4)
- MOMENTUM:7.0>=5.5
- INSIDER:OK
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.0=NEGATIVE
- EARNINGS_PROXIMITY:0d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.01
Upside
-0.1%
Downside
7.9%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: News gate: 2 distinct critical events (2 MATERIAL_RISK articles). The 10-dimension scores remain Growth at 8.2 (strongest), but ASYMMETRY:-0.0=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Growth at 8.2, Risk (lower is worse) at 7.4, and Quality at 7.3; the weakest are Value at 4.7, Technical at 5.3, and Catalyst at 5.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.01 and an engine sizing output of STARTER.
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.