Yum! Brands, Inc. (YUM) Intrinsic Value & DCF Valuation
Restaurants · NYSE
Current Price
$139.84
Intrinsic Value
$142.17
+1.6% margin of safety
What Is Yum! Brands, Inc.'s Intrinsic Value?
As of 2026-10-06, the base-case DCF model estimates the intrinsic value of Yum! Brands, Inc. (YUM) at $142.17 per share, compared with a market price of $139.84, a margin of safety of +1.6%. The base case assumes 5.8% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $116.57 to $171.51. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Yum! Brands, Inc. (YUM) Undervalued?
At $139.84, YUM trades about 1.6% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Global Brand Recognition and Scale
YUM's iconic brands like KFC and Pizza Hut possess immense global recognition. This scale provides significant purchasing power and operational efficiencies.
↑Franchise Model Efficiency
The vast majority of YUM's restaurants operate on a franchise model. This reduces capital expenditure and allows for rapid expansion with local market expertise.
↑Supply Chain Dominance
YUM's extensive global supply chain network offers cost advantages and ensures consistent product availability across its diverse markets.
INVESTMENT RISKS
↓Geopolitical and Economic Instability
YUM's global presence exposes it to risks from political unrest, currency fluctuations, and economic downturns in various international markets.
↓Labor Shortages and Wage Inflation
The restaurant industry faces ongoing challenges with labor availability and rising wages, impacting operational costs and profitability.
↓Food Safety and Reputation Management
Any food safety incident or negative publicity can severely damage brand reputation and customer trust across all its restaurant chains.
Base case
YUM base case valuation
Intrinsic Value
$142.17
Margin of safety
+1.6%
Expected annual return
+0.3%
Base case assumptions: 5.8% annual growth, 10.0% discount rate, 22.96x exit multiple, 5 year projection. Data as of 2026-10-06.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the YUM valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Yum! Brands, Inc. respond.
Open DCF Calculator for YUMCompany Overview
YUM! Brands, Inc. (YUM) is a leading global quick-service restaurant enterprise that focuses on the creation, management, and franchising of its restaurant concepts internationally. Its business is organized into four main divisions: KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill. The company operates establishments under these well-known brands, offering diverse food categories such as chicken, pizza, Mexican-style dishes, and made-to-order chargrilled burgers and sandwiches, among other food products. As of December 31, 2021, YUM! Brands boasted a significant worldwide presence, comprising 26,934 KFC outlets, 18,381 Pizza Hut locations, 7,791 Taco Bell restaurants, and 318 The Habit Burger Grill units, spread across roughly 157 countries and territories. The company, which maintains its headquarters in Louisville, Kentucky, was established in 1997. It was formerly known as TRICON Global Restaurants, Inc., before officially adopting the name YUM! Brands, Inc. in May 2002.
Financial Metrics — YUM Stock Valuation Data
Revenue/Share (TTM)
$31.49
FCF/Share (TTM)
$6.06
ROIC (TTM)
37.5%
ROE (TTM)
-30.3%
P/FCF
23.0x
EV/EBITDA
17.4x
FCF Yield
4.36%
Debt/Equity
n/m
On a trailing twelve-month basis, YUM generates free cash flow per share of $6.06 alongside a ROIC of 37.5%, both central inputs for a DCF valuation. Its P/FCF ratio of 23.0x and FCF yield of 4.36% then frame how YUM is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of YUM?
Yum! Brands, Inc. currently generates $6.06 in free cash flow per share. At the current price of $139.84, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is YUM undervalued?
YUM trades at a P/FCF ratio of 23.0x with a free cash flow yield of 4.36%. This P/FCF is in a moderate range. However, whether YUM is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value YUM stock using DCF?
To perform a DCF valuation on Yum! Brands, Inc.: (1) Start with the trailing free cash flow per share ($6.06) as the base, (2) project future FCF growth over 5-10 years based on Restaurants industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting YUM's risk profile — with a debt-to-equity of -1.73x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to YUM?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Yum! Brands, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Restaurants trends, then discounting those amounts to today's dollars. YUM's ROIC of 37.5% reflects how efficiently the company converts invested capital into profit.
How does WACC affect YUM stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For YUM, with a debt-to-equity ratio of -1.73x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 17.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See YUM PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value YUM with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-06. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.