Yum Earnings: Little Change to Our Constructive Outlook Despite Mixed Quarterly Results

Wide-moat Yum Brands continues to drive strong growth across its global portfolio, eclipsing $60 billion in systemwide sales during 2024 as it added a striking 3,353 net stores (6.1% annual growth) despite persistent headwinds in the restaurant industry. The firm's digital capabilities provide its franchisees with a strong edge, particularly in emerging markets, and relationships with well-capitalized operators in key countries solidify the firm's competitive positioning relative to smaller category peers. This is the narrative that we believe investors should continue to adhere to coming out of a quarter that slightly missed our own (and FactSet consensus) expectations, with Yum Brands representing one of our best ideas in the industry. After digesting results, we plan to hold the line on our $139 fair value estimate, leaving shares looking slightly cheap.