What Happened?
Shares of fast-food company Yum! Brands (NYSE: YUM) jumped 5.7% in the morning session after the company reported third-quarter results that beat profit expectations and announced it was exploring strategic options for its Pizza Hut brand.
Adjusted earnings per share of $1.58 grew roughly 15% from the previous year, surpassing analyst estimates. This profit beat occurred even as total revenue of $1.98 billion slightly missed market forecasts. Despite this, a key metric for any modern restaurant, digital sales hit a record $10 billion in the quarter. This channel now accounts for a record 60% of all system sales, showing the company's tech integration is paying off. Alongside the results, Yum! announced a strategic review for its Pizza Hut brand, with potential options including an outright sale, divesting a stake in the chain, or forming a joint venture. Investors appeared to focus on the strong profit growth and the proactive steps being taken with the Pizza Hut division, overlooking the slight revenue shortfall.
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What Is The Market Telling Us
Yum! Brands’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 8.1% on the news that the company reported fourth-quarter results that met analysts' expectations for same-store sales, leading to in-line revenue. On the bottom line, EPS beat slightly. While there was no specific 2025 guidance, management noted that this year should be another one following their long-term growth algorithm. Overall, this was a solid quarter with no major surprises.
Yum! Brands is up 11.6% since the beginning of the year, and at $149.09 per share, it is trading close to its 52-week high of $162.53 from March 2025. Investors who bought $1,000 worth of Yum! Brands’s shares 5 years ago would now be looking at an investment worth $1,512.
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