Bear of the Day: Yum! Brands, Inc. (YUM)

Yum! Brands, Inc. YUM is the restaurant giant behind KFC, Taco Bell, and Habit Burger & Grill.

Yum’s earnings outlook has trended lower over the last several years as it struggles against headwinds facing the entire fast food industry.

The company is trying to adapt, and it even sold one of its struggling, yet iconic brands, Pizza Hut, recently. Its recent wave of downward earnings revisions land the stock a Zacks Rank #5 (Strong Sell) right now.

Should Investors Stay Away from YUM Stock Right Now?

Yum! Brands is the parent company behind Taco Bell, KFC, and fast-casual concept Habit Burger.

The company and its subsidiaries franchise or operate more than 44,000 restaurants in 150 countries.

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The company announced in the middle of June that it entered into “definitive agreements to sell Pizza Hut for $2.7 billion in the aggregate, subject to certain purchase price adjustments…” 

“Pizza Hut, excluding Mainland China, will be acquired by LongRange Capital, a private equity firm with a customer-centric and operationally oriented approach, and Pizza Hut in Mainland China will be acquired by Yum China Holdings, Inc. (YUMC).” 

Yum is struggling against an array of headwinds battering its standing on Wall Street and with some customers.

The owner of KFC and beyond is trying to navigate inflation that’s hitting lower-income customers, as well as the negative impact of changing eating habits and the rise of GLP-1 diets.

Yum is still projected to grow its revenue and earnings at solid rates in 2026 and 2027.

But its downward earnings revisions land it a Zacks Rank #5 (Strong Sell) right now. They are also part of a long-term trend of negative earnings revisions.

The fast-food giant has climbed only 10% in the past five years, while the S&P 500 jumped ~75%.

Plus, YUM’s Retail – Restaurants industry sits in the bottom 34% of ~250 Zacks industries. All in, it might be best for investors looking to buy stocks right now to look elsewhere until Yum proves it’s ready to turn things around.

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

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