Value
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.1 |
| P/S | 6.9 |
| EV/EBITDA | 1.0 |
| Fwd P/E | 6.3 |
| PEG | 4.6 |
| Analyst target | 5.0 |
- ▸Forward P/E: 20.6x
- ▸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.
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VerdictSELL
Overall score6.4/10
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. | →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%. | →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. | →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.
→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.
→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
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
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 9.0 |
| OBV | 10.0 |
| MA position | 5.2 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+0.8%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.9 |
| Analyst rating | 7.5 |
| Price target | 7.1 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $1,942,279 (0.005% of mkt cap)
Peer rank
6.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.1 |
| quality rank | 9.0 |
| growth rank | 8.5 |
- ▸Best-in-class margins
- ▸Industry growth leader
Technical
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.7 |
| support resistance | 6.0 |
| 52w position | 8.0 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 7.0 |
| volatility | 7.1 |
| put call | 4.5 |
| implied vol | 7.7 |
| max pain risk | 7.0 |
| beta | 9.6 |
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
| dividend safety | 6.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 196.0%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (5)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.7<1.5@spot
- NEWS_SOFT:LEADERSHIP_CHANGE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.65
Upside
+3.3%
Downside
5.0%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 56 mid-range, Bollinger mid-band
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.7>=5.5. Top dim: Growth at 8.2; weakest: Value at 4.9. No conviction either direction.
The strongest dimensions are Growth at 8.2, Quality at 7.3, and Risk (lower is worse) at 7.3; the weakest are Value at 4.9, Insider at 5.0, and Catalyst at 5.2. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.65 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Yum! 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.
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P2The 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.
Trip ifFree cash flow conversion drops below 60% of net income for 2 consecutive quarters.
- P3At 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.
Trip ifStock price rises above $158, exceeding the analyst target by more than 1%, signaling overextension.
- P4The 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.
Trip ifRSI falls below 40 and price drops below the 200-day moving average for more than 10 consecutive trading days.