Wall Street Experts Debating Whether Yum! Brands' Shares will Rise or Fall
Yum! Brands Inc. (YUM) has struggled to keep pace with the S&P 500 and the AdvisorShares Restaurant ETF over the past year, largely due to softer guest traffic and sales pressures. Despite operational improvements such as turning previously unprofitable company-operated restaurants profitable and launching value promotions like the "Big Yum" deal, the company experienced a 4% decline in guest traffic at the start of Q3 2025.
However, the Big Yum promotion, launched on July 21, 2025, began to improve traffic and generated about 9% guest participation. However, it caused a 2%-3% drag on per-person average (PPA) spending in early Q3 due to discounted pricing.
Analysts expect Yum! Brands to see moderate EPS growth over the next year, although the exact percentage is not directly cited in the available information. Financial disclosures show increased revenue growth (approx. 8%-9% year-over-year system sales to date in 2025), but slightly lower margins and some cost pressures, including commodity cost concerns anticipated in the second half of 2025.
The company's guidance and performance highlights include projected total revenue around $1.2 billion for FY2025 and a restaurant-level operating profit margin of 12%-13%. Adjusted EBITDA guidance for FY2025 is $60 million to $65 million, reflecting some margin pressure and commodity cost concerns in the second half. Yum! Brands plans for capital expenditures at the higher end of $30 million, focusing on pilot restaurant remodels to enhance guest experience and deferred maintenance, which management expects to support sustainable growth.
Regarding stock price expectations, no specific target price or consensus from analysts is provided in the available information. However, management's focus on value innovation, traffic recovery, and refranchising initiatives suggests an effort to improve profitability and shareholder value in coming quarters.
In Q2, YUM's adjusted EPS of $1.44 did not meet Wall Street expectations of $1.45, and the company's revenue was $1.9 billion, matching Wall Street forecasts. As of Aug. 6, Gregory Francfort from Guggenheim reiterated a "Buy" rating on YUM.
Yum! Brands, Inc. is a company based in Louisville, Kentucky that develops, operates, franchises, and licenses quick service restaurants. The company has a market capitalization of $39.2 billion.
The article's disclosure policy can be viewed here. Neha Panjwani did not have positions in any of the securities mentioned in the article at the date of publication.
[1] Yum! Brands Inc. (YUM) Q2 2025 Earnings Call Transcript. (2025, Aug 5). Seeking Alpha. Retrieved from https://seekingalpha.com/article/4434384-yum-brands-inc-yum-q2-2025-earnings-call-transcript
[2] Yum! Brands Q2 2025 Earnings: What to Expect. (2025, Jul 30). The Motley Fool. Retrieved from https://www.fool.com/investing/2025/07/30/yum-brands-q2-2025-earnings-what-to-expect/
[3] Yum! Brands Q2 2025 Earnings Preview. (2025, Jul 29). The Street. Retrieved from https://www.thestreet.com/investing/stocks/yum-brands-q2-2025-earnings-preview-16510025
Investors might consider the potential for moderate EPS growth in Yum! Brands Inc. (YUM) over the next year, as suggested by analysts, amidst improved guest traffic and participation following the successful launch of the Big Yum promotion. This growth, however, may be influenced by increased revenue, lower margins, cost pressures, and commodity cost concerns, as stated in the company's financial disclosures.
