Title

Earning Preview: Yum! Brands revenue is expected to increase by 4.46%, and institutional views are Neutral

Abstract

Yum! Brands will report quarterly results on February 04, 2026 Pre-Market, with consensus indicating revenue of $2.45 billion and adjusted EPS of $1.77, while investors gauge segment trends across KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill alongside margin resilience and unit growth.

Market Forecast

Consensus for the current quarter points to revenue of $2.45 billion, adjusted EPS of $1.77, and EBIT of $0.78 billion, implying year-over-year growth of 4.46%, 10.97%, and 8.62%, respectively. Forecast data for gross profit margin and net profit margin is not available, and will be assessed against actuals when the company reports.

Yum! Brands’ main business remains driven by its global franchised system across KFC, Taco Bell, and Pizza Hut, where new-unit openings and royalty flows anchor predictable fee streams, supported by value-oriented promotions and steady transaction growth. Within the portfolio, Taco Bell stands out as the most promising near-term growth engine, with last quarter’s segment revenue of $0.73 billion; the enterprise delivered overall year-over-year revenue growth of 8.38% in the previous quarter, and Taco Bell is positioned to outperform due to innovation and menu leverage.

Last Quarter Review

Yum! Brands reported prior-quarter revenue of $1.98 billion, a gross profit margin of 46.99%, GAAP net profit attributable to the parent company of $0.40 billion, a net profit margin of 20.06%, and adjusted EPS of $1.58, up 15.33% year over year.

A key financial highlight was operational outperformance versus internal expectations, as EBIT of $0.68 billion exceeded the prior estimate and supported EPS upside amid balanced pricing and cost control. In the quarter, KFC contributed $0.88 billion, Taco Bell provided $0.73 billion, Pizza Hut delivered $0.24 billion, and The Habit Burger Grill added $0.13 billion, with consolidated revenue up 8.38% year over year; net profit rose sequentially by 6.15%, reflecting robust margin execution.

Current Quarter Outlook

Main Business: KFC

KFC, the largest revenue contributor, enters the quarter with momentum built on accessible value tiers and family bundles that have sustained footfall while preserving brand equity. The prior quarter’s $0.88 billion from KFC underscores its central role in driving royalty income and franchise fees across major markets. The performance equation hinges on balancing modest price actions with transaction growth; a stable mix of bucket meals and key protein offers can support average ticket sizes while retaining frequency. Operationally, KFC’s scale gives it purchasing advantages in poultry and packaging, which, together with disciplined labor scheduling, helps protect store-level margins against seasonal cost volatility. We expect KFC to be a stabilizer for consolidated results, with steady international contributions and resilience in core U.S. markets even if traffic normalizes from promotional peaks. Any read-through from early-quarter sales cadence will likely magnify into franchise royalties, given the royalty-base structure, and incremental new-unit openings can add a modest but measurable revenue lift.

Most Promising Business: Taco Bell

Taco Bell is positioned as the portfolio’s near-term growth driver due to its highly adaptable menu architecture, periodic limited-time offers, and breakfast initiatives that expand dayparts. With $0.73 billion in segment revenue last quarter, Taco Bell’s product innovation and value propositions give it room to outperform, particularly when marketing synchronizes with social and digital activations that drive trial and repeat orders. The brand’s ability to cycle in and out popular items while managing food cost inflation through recipe engineering helps sustain margin quality without sacrificing perceived value. The mix of classic favorites and premium novelty items provides flexibility to draw traffic from price-sensitive consumers and occasional splurge buyers, supporting a balanced ticket structure. A constructive quarter would feature healthy same-store sales growth, aided by promotions that do not overly rely on deep discounting, thereby protecting franchise margins. If execution remains consistent, Taco Bell can provide upside to consolidated EPS via outsized royalty growth tied to incremental sales and disciplined cost management, translating into favorable EBIT dynamics.

Key Stock Price Drivers This Quarter

The first stock price driver will be the interplay between same-store sales trends and pricing elasticity across the three major brands, since EPS estimates of $1.77 assume continued sales leverage without pronounced traffic risk. Strong limited-time offer performance at Taco Bell and balanced value platforms at KFC are particularly important for sustaining steady transaction volumes while keeping margins intact. The second driver is margin persistence—gross margin stability around prior-quarter levels would signal robust procurement and labor management, while any unexpected cost spikes in proteins, dairy, or packaging could compress EBIT and pressure EPS. A third driver is unit growth and franchising pace, as incremental openings yield royalty expansion and create a durable base for future earnings; investors will scrutinize net-new unit contribution to top-line scale versus market-level volatility. Currency effects matter at the reported level due to international royalties; while the company’s franchise-heavy model tends to moderate volatility, adverse currency movements could affect reported revenue and EBIT translation. Finally, engagement and digital order penetration remain key levers for throughput and labor efficiency, providing incremental margin tailwinds if order-ahead and delivery continue to scale smoothly within major markets.

Analyst Opinions

The balance of published views in the last six months shows a bullish skew among buy ratings versus sell ratings, with bullish opinions outnumbering bearish by a ratio of 2.00 to 0.00. TD Cowen maintained a Buy rating with a $173.00 price target, emphasizing confidence in Yum! Brands’ earnings power supported by segment innovation and reliable fee-based royalties. Barclays reiterated a Buy rating with a $163.00 price target, highlighting margin durability and the positive impact of ongoing unit growth and disciplined promotional strategy on consolidated EBIT and EPS trajectories. The buy-side focus centers on Taco Bell’s menu agility and KFC’s steady throughput, which together anchor the company’s capacity to meet or exceed EPS expectations of $1.77 and deliver forecast revenue of $2.45 billion. Supportive views point to the prior quarter’s strong adjusted EPS of $1.58 and EBIT of $0.68 billion as evidence of effective execution that can carry into the current period, underpinned by controlled cost dynamics and balanced pricing strategies. In this framework, bullish analysts expect that the projected year-over-year increases in revenue of 4.46% and EPS of 10.97% are achievable, supported by consistent royalty streams, disciplined promotional calendars, and selective new-unit openings that compound revenue growth without materially diluting margins.

Beyond price targets, the bullish case ties into the predictability of the franchised model: royalty income tends to follow same-store sales trends and unit growth, creating positive operating leverage when costs are well managed. Analysts see upside if Taco Bell’s limited-time offers resonate strongly and if KFC sustains value-driven traffic in core markets, feeding steady consolidated performance. The absence of bearish ratings in the collected period accentuates that downside cases are less represented in the published commentary, though neutral views remain mindful of execution risks and the typical variances in quarter-to-quarter promotional efficacy. However, the buy-side narrative maintains that Yum! Brands’ diversified brand portfolio, robust franchise relationships, and proven promotional engine provide the necessary flexibility to support EBIT growth of 8.62% year over year this quarter and align outcomes with consensus EPS of $1.77. Should actual results confirm revenue near $2.45 billion and margins that are consistent with prior-quarter levels, bullish institutions believe the stock can sustain constructive sentiment as the company demonstrates ongoing operational resilience and effective capital-light scaling through franchising.