Yum! Brands, Inc. Fundamental Analysis (NYSE: YUM)
Yum! Brands, Inc. (NYSE: YUM) shows moderate financial fundamentals with a PE ratio of 18.96, profit margin of 25.42%, and ROE of -30.35%. The company generates $8.7B in annual revenue with moderate year-over-year growth of 8.81%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 42.8/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze YUM's fundamental strength across five key dimensions:
Efficiency Score
ExcellentYUM demonstrates superior asset utilization.
Valuation Score
ExcellentYUM trades at attractive valuation levels.
Growth Score
ModerateYUM shows steady but slowing expansion.
Financial Health Score
ModerateYUM shows balanced financial health with some risks.
Profitability Score
ModerateYUM maintains healthy but balanced margins.
Key Financial Metrics
Is YUM Expensive or Cheap?
P/E Ratio
YUM trades at 18.96 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, YUM's PEG of 0.33 indicates potential undervaluation.
Price to Book
The market values Yum! Brands, Inc. at -5.92 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 10.50 times EBITDA. This signals the market has high growth expectations.
How Well Does YUM Make Money?
Net Profit Margin
For every $100 in sales, Yum! Brands, Inc. keeps $25.42 as profit after all expenses.
Operating Margin
Core operations generate 30.99 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-30.35 in profit for every $100 of shareholder equity.
ROA
Yum! Brands, Inc. generates $25.54 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Yum! Brands, Inc. produces operating cash flow of $2.07B, showing steady but balanced cash generation.
Free Cash Flow
Yum! Brands, Inc. generates strong free cash flow of $1.67B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $6.06 in free cash annually.
FCF Yield
YUM converts 4.01% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
18.96
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.33
vs 25 benchmark
P/B Ratio
Price to book value ratio
-5.92
vs 25 benchmark
P/S Ratio
Price to sales ratio
4.80
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-1.73
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.59
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.30
vs 25 benchmark
ROA
Return on assets percentage
0.26
vs 25 benchmark
ROCE
Return on capital employed
0.62
vs 25 benchmark
How YUM Stacks Against Its Sector Peers
| Metric | YUM Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 18.96 | 27.56 | Better (Cheaper) |
| ROE | -30.35% | 931.00% | Weak |
| Net Margin | 25.42% | -2998.00% (disorted) | Strong |
| Debt/Equity | -1.73 | 0.61 | Strong (Low Leverage) |
| Current Ratio | 0.59 | 2.24 | Weak Liquidity |
| ROA | 25.54% | 328.00% | Weak |
YUM outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Yum! Brands, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
57.88%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
87.34%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
67.32%
Industry Style: Cyclical, Growth, Discretionary
High Growth