10-Q · May 6, 2026
Yum! Brands reported solid growth in Q1 2026, achieving revenues of $2.06 billion and GAAP EPS of $1.55, both surpassing estimates. While KFC and Taco Bell experienced strong performance, Pizza Hut showed stagnant…
Earnings analysis · 10-Q
YUM earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
YUM produced solid Q2 top-line and adjusted-profit growth, led by Taco Bell and KFC: revenue rose 12% to $2.169 billion and adjusted EPS rose 12% to $1.62. Reported EPS of $3.08 was materially elevated by Pizza Hut…
Read full summary
YUM produced solid Q2 top-line and adjusted-profit growth, led by Taco Bell and KFC: revenue rose 12% to $2.169 billion and adjusted EPS rose 12% to $1.62. Reported EPS of $3.08 was materially elevated by Pizza Hut transaction-related tax benefits, while operating margin declined to 30.2% from 32.2% a year ago. The prospective $2.3 billion Pizza Hut sale and expanded repurchase authorization are capital-return positives, but the Taco Bell food-safety disruption, Pizza Hut deterioration, and refinancing needs temper the outlook.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $3.08
- Operating margin
- 30.2%
What stood out
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Revenue growth continued, but margin compressed
Q2 revenue rose 12% year over year to $2.169 billion from $1.933 billion, and increased 5% sequentially from Q1 2026 revenue of $2.06 billion. Operating profit increased 5% to $655 million from $622 million, implying a 30.2% operating margin versus 32.2% a year ago.
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Adjusted EPS grew 12% and beat consensus
GAAP diluted EPS was $3.08, up 131% from $1.33, while EPS excluding special items rose 12% to $1.62 from $1.44. The GAAP result included a $359 million tax benefit tied to the planned Pizza Hut sale; adjusted EPS exceeded the $1.58 consensus estimate by $0.04.
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Taco Bell delivered broad-based growth
Taco Bell was the largest operating driver: system sales increased 9% to $4.677 billion, same-store sales rose 7%, and operating profit increased 19% to $311 million. Company restaurant margin expanded 1.6 points to 25.9%.
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KFC unit growth supported profit expansion
KFC system sales grew 6% excluding FX to $9.254 billion, supported by 2% same-store sales growth and 7% unit growth; operating profit increased 9% excluding FX to $410 million. The division added to a 34,747-unit base, 90% of which is outside the U.S.
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Operating cash generation improved
Year-to-date operating cash flow increased to $923 million from $850 million, a $73 million increase, as higher operating profit more than offset higher incentive compensation and tax payments. Management expects continued strong operating cash flow in 2026.
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Pizza Hut sale funds buyback capacity
YUM expects approximately $2.3 billion in after-tax net proceeds from the Pizza Hut divestitures, anticipated to close in August 2026. The board authorized up to $4.0 billion of incremental repurchases through June 30, 2028, with $4.389 billion of aggregate authorization capacity remaining at June 30.
What to watch
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Taco Bell food-safety event pressures Q3
The sole material risk-factor update was expanded for the July 2026 multistate Cyclospora outbreak. Taco Bell removed certain lettuce nationwide, and management said the incident had a meaningful near-term sales impact; Q3 Taco Bell U.S. company-restaurant margin is expected at 19% to 21%, below Q2's 25.9%.
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Pizza Hut weakness and sale costs persist
Pizza Hut operating profit fell 12% to $70 million, while system sales declined 2% excluding FX to $3.052 billion and same-store sales declined 1%. The company expects to incur approximately $40 million of further strategic-review expense during the remainder of 2026.
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Refinancing and leverage remain material
Debt remains substantial at $12.190 billion including the revolving facility, with $675 million outstanding under that facility. YUM expects to refinance the $750 million subsidiary senior unsecured notes before the relevant June 2027 threshold; otherwise, the credit facilities mature less than 12 months after June 30, 2026.
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Habit profitability deteriorated
Habit Burger & Grill reported a $4 million operating loss versus $3 million of operating profit a year earlier, despite 7% system-sales growth to $177 million. Year-to-date, the segment's operating loss widened to $11 million from $2 million of profit.
Management's outlook
No consolidated revenue or EPS guidance was provided in the 10-Q. Management expects Taco Bell U.S. company-restaurant margin of 19% to 21% in Q3 2026, expects Pizza Hut transactions to close in August 2026 with approximately $2.3 billion of net proceeds, and expects approximately $40 million of additional Pizza Hut review costs in the remainder of 2026.
Earlier filings 4
10-K · February 20, 2026
Yum! Brands reported record 2025 revenues of $8,214 million (up from $7,549 million in 2024) with Operating Profit of $2,574 million and diluted EPS of $5.55. The company generated strong operating cash flow of $2,010…
10-Q · May 7, 2025
Yum! Brands reported Q1 revenues of $1,787 million, up $189 million (+11.8%) versus Q1 2024, with operating profit of $548 million. Diluted EPS fell to $0.90 from $1.10 a year earlier, primarily driven by a $92 million…
10-K · February 19, 2025
Yum! Brands (YUM) emphasizes growth through its Recipe for Good Growth — driving brand innovation, franchise economics and a technology-led ‘Byte by Yum!’ platform — while operating a 61,346-unit global franchise…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.