YUM surges on earnings beat, Taco Bell momentum drives dividend hike
Fast-food giant exceeds analyst expectations with 16.8% EPS beat and accelerates shareholder returns
Yum! Brands shares rallied Wednesday after the fast-food giant reported quarterly results that handily exceeded Wall Street expectations, driven by robust performance at Taco Bell and record store expansion at KFC, alongside a 6% dividend increase.
The Louisville-based company reported fourth-quarter earnings per share of $1.73, excluding special items, beating analyst estimates of $1.48 by 16.8%. Revenue reached $2.51 billion, surpassing the $1.97 billion consensus forecast by a substantial 27.6%, according to analyst research data. For the full year, adjusted EPS grew 10%.
Taco Bell emerged as the standout performer, with same-store sales climbing 7% in the quarter, extending the brand's momentum in the competitive fast-food landscape. The Mexican-inspired chain's worldwide system sales increased 8% in the quarter, with U.S. same-store sales up 7% for the full year 2025, according to the company's earnings announcement.
"Taco Bell's performance demonstrates the strength of our value proposition and our ability to connect with younger consumers," the company stated in its quarterly release, noting that GAAP operating profit increased 12% to $738 million.
KFC, Yum's largest brand by store count, delivered 6% worldwide system sales growth in the quarter, driven by international expansion. The fried chicken chain achieved a record 2,986 new unit builds in 2025, cementing its position as the company's primary growth engine outside North America. Worldwide system sales across all Yum brands grew 5% in the quarter, excluding currency impacts and an extra week in the reporting period.
The strong performance enabled Yum's board to approve a 6% increase in the quarterly dividend to $0.75 per share, marking the company's continued commitment to shareholder returns. The stock currently yields approximately 1.8% at its current price around $158.70.
Despite the strong results, Yum continues to evaluate options for Pizza Hut, which has struggled to keep pace with its sibling brands. The company confirmed that a strategic review of the struggling pizza chain remains ongoing, as it explores alternatives to improve performance including potential partnerships or other strategic alternatives.
Analysts responded positively to the results, with UBS maintaining a "Buy" rating and $180 price target, while TD Cowen upgraded the stock to "Buy" with an $180 target. The average analyst price target stands at approximately $164 to $165, suggesting modest upside from current levels, according to market data.
"Yum is well-positioned for growth as Taco Bell and KFC momentum continue," UBS analysts wrote in a note following the earnings release, highlighting the company's digital sales growth and the benefits from its "Byte by Yum!" technology platform.
The strong quarterly performance comes as Yum faces increasing competition in the fast-food sector, where value wars have intensified as inflation-conscious consumers seek affordable dining options. Taco Bell's success in balancing value perception with premium offerings has helped it navigate the challenging environment better than many competitors.
Looking ahead, investors will focus on management's 2026 guidance and updates on the Pizza Hut strategic review. KFC's international expansion, particularly in high-growth markets like China and India, remains a key long-term growth driver, while Taco Bell's innovation pipeline and digital ordering capabilities position it for sustained U.S. market share gains.
With a market capitalization of approximately $43 billion and shares trading near their 52-week high of $161, Yum's valuation reflects investor confidence in its multi-brand strategy and ability to deliver consistent earnings growth through both same-store sales increases and global unit expansion.