DCF Studio

    YUM · NYQ · Consumer Cyclical

    Yum! Brands, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 108.07

    Market price

    USD 157.60

    Implied upside

    -31.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 4.0% of revenue against depreciation of 2.3%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 20.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 108.07-31.4%
    Exit multiple
    USD 132.80-15.7%
    Market price
    USD 157.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 8.7bnUSD 8.7bnUSD 8.7bnUSD 8.8bnUSD 8.8bnUSD 8.9bnUSD 9.1bnUSD 9.2bnUSD 9.4bnUSD 9.7bn+1.2%
    EBITUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.9bnUSD 2.9bnUSD 3.0bnUSD 3.1bn+1.2%
    NOPATUSD 2.2bnUSD 2.2bnUSD 2.2bnUSD 2.2bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.3bnUSD 2.4bnUSD 2.4bn+1.2%
    Add depreciation & amortisationUSD 198.4mUSD 198.1mUSD 198.5mUSD 199.6mUSD 201.3mUSD 203.7mUSD 206.8mUSD 210.6mUSD 215.2mUSD 220.6m+1.2%
    Less capital expenditureUSD -348.5mUSD -342.6mUSD -337.9mUSD -334.2mUSD -331.6mUSD -329.9mUSD -329.2mUSD -329.5mUSD -330.8mUSD -333.0m-0.5%
    Capex, % of revenue4.0%3.9%3.9%3.8%3.8%3.7%3.6%3.6%3.5%3.4%-
    Less increase in working capitalUSD -33.0mUSD 704.3kUSD -1.2mUSD -3.2mUSD -5.2mUSD -7.2mUSD -9.3mUSD -11.4mUSD -13.7mUSD -16.1m-7.7%
    Free cashflow to firmUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bn+1.6%
    Discount factor0.96670.90340.84420.78890.73720.68900.64380.60170.56230.5254-
    Present valueUSD 1.9bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bnUSD 1.4bnUSD 1.4bnUSD 1.3bnUSD 1.3bnUSD 1.2bn-
    Present Value Of The ForecastUSD 15.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.683Reported 0.527, pulled toward 1.0 (Blume)
    Cost of equity7.78%Risk-free + beta x equity risk premium
    Cost of debt5.67%Risk-free + 78bp, the spread for a A rating at 5.0x interest cover. Book interest / average debt was lower, at 3.9%.
    Market capitalisationUSD 43.0bn76.5% of capital
    Total debtUSD 13.2bn23.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.01%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 108.07

    64% of EV

    Forecast FCFF, final year
    USD 2.3bn
    Capex at depreciation, working capital in reinvestment
    USD 2.4bn
    Less reinvestment at g/ROIC (4.6% of NOPAT)
    USD -112.4m
    Capitalised
    USD 2.3bn
    ROIC (reported)
    53.9%
    Terminal value, undiscounted
    USD 52.5bn
    Terminal value, discounted
    USD 27.6bn
    Enterprise value
    USD 42.8bn
    Less net debt
    USD 12.5bn
    Equity value
    USD 30.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 132.80

    69% of EV

    Terminal value, undiscounted
    USD 65.8bn
    Terminal value, discounted
    USD 34.6bn
    Enterprise value
    USD 49.8bn
    Less net debt
    USD 12.5bn
    Equity value
    USD 37.3bn

    Spread between methods: 21%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.01%167.78192.01225.99277.00361.95
    6.01%121.16133.86150.23172.12202.82
    7.01%91.4898.93108.07119.54134.33
    8.01%70.9475.6381.2087.9396.18
    9.01%55.8858.9862.5866.8271.85

    Outlined: this model. Green text: above today's price of 157.60. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year6.3%1.6%4.9%
    EBIT margin32.5%31.7%41.9%
    Discount rate-7.0%5.9%
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    Yahoo Finance and RBA data. General information, not advice. Methodology.