Yum! Brands Posts Mixed Quarter, Announces Strategic Review for Pizza Hut
YUM! BRANDS INC (NYSE:YUM) reported financial results for the fourth quarter and full year ended December 31, 2025, delivering a performance that narrowly surpassed revenue expectations but fell slightly short on the bottom line. The parent company of KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill also announced a significant strategic move, initiating a review of options for its struggling Pizza Hut brand.
Earnings Snapshot vs. Estimates
The company’s top-line strength was evident in the quarter, with system-wide sales growth and digital engagement driving revenue past analyst forecasts. However, profitability metrics presented a more nuanced picture.
- Revenue: Reported revenue of $2.51 billion, a 6.4% year-over-year increase, exceeded the consensus estimate of approximately $2.48 billion.
- Earnings Per Share (Non-GAAP): EPS, excluding special items, came in at $1.73. This represented an 8% increase from the $1.61 reported in the prior-year quarter but was 1.5% below the analyst estimate of $1.79.
- Full-Year Performance: For the full year 2025, non-GAAP EPS was $6.05, a 10% increase over 2024.
Market Reaction and Price Action
Following the earnings release, the market reaction has been cautiously positive. In pre-market trading, the stock showed minimal movement. However, a broader view reveals a more constructive trend, with the share price appreciating over the past month. This suggests investors may be focusing on the company's underlying growth drivers and strategic initiatives rather than the minor EPS miss.
- Pre-Market (Feb. 4): Essentially flat.
- Past Week: Up approximately 3.1%.
- Past Month: Up approximately 5.6%.
Key Highlights from the Quarter
The quarter was characterized by robust performance from Taco Bell and KFC, offset by continued challenges at Pizza Hut. Management emphasized digital growth and unit expansion.
- Brand Performance: Taco Bell was the standout, with system sales growth of 8% (excluding foreign exchange and calendar impacts) and same-store sales growth of 7%. KFC delivered system sales growth of 6% and achieved another record year for unit development. Conversely, Pizza Hut system sales declined 2% under the same metrics.
- Digital and Unit Growth: Digital system sales remained a powerhouse, exceeding $11 billion for the quarter with a digital sales mix nearing 60%. The company opened 1,814 gross new units globally, contributing to 3% year-over-year unit growth.
- Strategic Shift: A major announcement was the commencement of a strategic review for the Pizza Hut brand. This signals a potential major portfolio change as the company seeks to address the division's persistent underperformance.
- Capital Return: The Board of Directors approved a 6% increase in the quarterly dividend to $0.75 per share, underscoring confidence in the company's cash flow.
Forward Outlook and Analyst Expectations
While the press release did not provide specific quantitative financial guidance for 2026, it outlined a long-term growth algorithm targeting 5% unit growth, 7% system sales growth (ex-F/X), and at least 8% core operating profit growth. The company expressed "momentum entering 2026."
Analyst estimates currently project continued growth. For the upcoming first quarter of 2026, consensus estimates point to revenue of approximately $2.01 billion. For the full year 2026, analysts are modeling sales of around $9.04 billion. The strategic review of Pizza Hut will be a critical factor influencing these forecasts and the company's future shape.
Conclusion
Yum! Brands' fourth quarter illustrates a tale of two portfolios: strong momentum at Taco Bell and KFC is effectively funding the company's growth and shareholder returns, while Pizza Hut remains a drag requiring decisive action. The market's positive drift over the past month indicates investor patience with the turnaround plan and approval of the strategic review announcement. The focus now shifts to the execution of the "Raise the Bar" priorities and the outcome of the Pizza Hut evaluation.
For a detailed look at historical earnings and future analyst estimates for YUM, visit the earnings and estimates page on Chartmill.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
