YUM earnings analysis
What we found in YUM's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- 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.
- 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.
- 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%.
- 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.
- 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.
- 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.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- 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%.
- 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.
- 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.
- 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.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $3.08
- Operating margin
- 30.2%
- Segment
- KFC Division revenue: $924 million (+9% reported; +5% excluding FX)
- Segment
- Taco Bell Division revenue: $853 million (+20%)
- Segment
- Pizza Hut Division revenue: $254 million (+6%)
- Segment
- Habit Burger & Grill Division revenue: $139 million (+4%)
What they said about what is next.
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.
The filing reads about the same as the one before it.
What came before.
- 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…
- 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. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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