Yum! Brands

Methodology

Yum! Brands' fair value calculation works well given the company's consistent earnings growth driven by franchise fee revenue and unit expansion across KFC, Taco Bell, and Pizza Hut globally. The method captures Yum's position as an asset-light franchisor with predictable cash flows from royalties and franchise fees rather than operating restaurants directly. Fair value estimates are reliable because the business model emphasizes recurring revenue from franchisees, though investors should normalize for international market volatility and competitive pressures.

Methodology

Yum! Brands typically commands moderate to premium PEG ratios reflecting its position as a global QSR franchisor with strong unit growth and steady same-store sales across its three major brands. The PEG framework works well for Yum because growth rates are predictable and driven by international expansion and digital ordering adoption, particularly for Taco Bell and KFC. Comparing Yum's PEG to other restaurant franchisors like McDonald's and Restaurant Brands provides context for relative valuation.

Methodology

Yum! Brands pays a meaningful dividend reflecting the cash-generative, asset-light nature of its franchise business model, making PEGY particularly relevant for total return analysis. The combination of steady mid-to-high-single-digit growth and an attractive dividend makes PEGY useful for evaluating the franchisor's balanced capital allocation. For income-focused investors, PEGY captures both Yum's reliable franchise fee growth and its commitment to returning cash through dividends and buybacks.