Why Is Yum (YUM) Down 6% Since Last Earnings Report?

A month has gone by since the last earnings report for Yum Brands (YUM). Shares have lost about 6% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Yum due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Yum! Brands, Inc. before we dive into how investors and analysts have reacted as of late.

YUM Q1 Earnings Beat Estimates on Taco Bell Sales and Digital Growth

Yum! Brands delivered first-quarter 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

The company reported adjusted earnings per share of $1.50, up 15.4% year over year and above the Zacks Consensus Estimate of $1.39 by 7.9%. Revenues increased 15.2% to $2.06 billion and topped the $2.01 billion estimate by 2.6%.

Results were powered by Taco Bell’s standout 8% same-store sales gain, while worldwide system sales grew 6% excluding foreign currency translation, signaling steady demand across much of the portfolio.

YUM Starts 2026 With Solid Global Momentum

YUM’s top-line strength extended beyond a single brand. Worldwide same-store sales grew 3% in the quarter, complementing system sales growth and underscoring a consumer environment that remained supportive for the company’s quick-service concepts.

Expansion also contributed. Unit count increased 5% year over year, supported by 1,030 gross new units opened in the quarter, keeping development activity aligned with the company’s long-term growth algorithm.

Yum! Brands Builds on KFC's Scale and Profitability

KFC continued to be a steady growth and cash-generation engine. The division’s restaurant count climbed 7% year over year to 34,332, reflecting broad-based expansion across markets.

Operationally, KFC delivered higher profitability. For first-quarter 2026, revenues from KFC totaled $879 million, up 14% from the prior-year quarter. Our model predicted the metric to increase 13.2% year over year. Comps in the division rose 2% year over year.

Franchise and property revenues rose 13% to $461 million, while operating profit increased 16% to $383 million. Operating margin improved 70 basis points to 43.6%, helped by stronger company-owned restaurant margins of 10.3%, up 100 basis points.

YUM Leans on Taco Bell for Consistent Growth

Taco Bell extended its growth streak with continued brand momentum. The division’s restaurant base increased 3% to 9,021, reflecting ongoing development progress even as the concept remained in a relatively mature stage in the United States.

Financial performance stayed firm. Taco Bell's revenues were $797 million, up 21% from the year-ago quarter's levels. Our model predicted the metric to increase 8.5% year over year. Comps in the segment increased 8%.

System sales increased 10% to $4,394 million, and franchise and property revenues advanced 7% to $251 million. Operating profit rose 16% to $281 million, though operating margin declined 150 basis points to 35.2%, suggesting less favorable cost leverage. The division opened 30 gross new restaurants and U.S. company-owned restaurant margins were 23.9%.

Yum! Brands Sees Pizza Hut Pressure, Habit Improves

Pizza Hut produced mixed results, with global stability masking notable regional divergence. The division’s restaurant count edged up 1% to 19,944, while system sales increased 3% to $3,114 million and same-store sales were flat overall. At Pizza Hut, revenues amounted to $253 million, up 10% year over year. Our model predicted Pizza Hut revenues to increase 1.8% year over year. Comps in the quarter were flat year over year.

Profitability weakened at Pizza Hut, with operating profit down 14% to $64 million and operating margin contracting to 25.4%. Regionally, U.S. system sales declined 6% excluding foreign currency translation, while China system sales rose 8% on the same basis. Pizza Hut opened 346 gross new restaurants.

At Habit Burger & Grill, system sales increased 7% and same-store sales grew 5%, supported by six gross new restaurant openings. In the first quarter, the Habit Burger Grill division’s revenues amounted to $130 million compared with $128 million reported in the prior-year quarter. Our model predicted the metric to be $129.4 million. Comps in the division grew 5% year over year.

YUM Highlights Cash Generation and Notable Items

Below the segment line, YUM reported GAAP net income of $432 million and GAAP diluted earnings of $1.55 per share.

Cash flow remained supportive of capital returns. Net cash provided by operating activities totaled $416 million, while capital spending was $75 million. The company repurchased $185 million of stock and paid $207 million in dividends, with dividends declared at $0.75 per share. On the balance sheet, cash and cash equivalents were $689 million at quarter's end, long-term debt totaled $10.21 billion and short-term borrowings rose to $1.74 billion from $38 million at Dec. 31, 2025.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Yum has a nice Growth Score of B, a score with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Yum has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research