YUM: Saying Peace Out to Pizza Hut; Sale Announced; Next Chapter Begins

Research evidence excerpt

YUM: Saying Peace Out to Pizza Hut; Sale Announced; Next Chapter Begins

E 1.81 E 2.25 E 7.30 E

Prior 1.43 E 1.74 E 1.85 E 2.28 E NC

Additional details. 1) YUM hinted at potentially higher LT comps vs it's current 3% algo Source: Company Data, Wells Fargo Securities estimates, and Factset.

and we anticipate further clarity (if not an official increase) during YUM's Q2 earnings call; NA = Not Available, NC = No Change, NE = No Estimate

The deal is expected to close in Q3; 2) YUM's Board of Directors approved an incremental Zachary Fadem, CPA

$4B buyback post-deal with PH's $2.3B of net proceeds likely earmarked for 2H; 3) YUM Equity Analyst | Wells Fargo Securities, LLC

and YUMC announced new financial incentives to accelerate KFC China's SWS growth plus Zachary.Fadem@wellsfargo.com | 212-214-8018

plans to advance Taco Bell's growth in Mainland China. Anthony Trainor

Equity Analyst | Wells Fargo Securities, LLC

YUM post Pizza Hut. 1) Excluding PH, YUM's '24/'25/'26 to date comps were -0.2/+3.9%/ Anthony.Trainor@wellsfargo.com | 212-214-1953

+3.5%, so a higher algo could make sense; PH's '24/'25/'26 to date op profit declined Taylor Brimberg

-5%/-9%/-14% vs YUM total +8%/+6%/+11%; 2) YUM views lunch & snacking occasions Associate Equity Analyst | Wells Fargo Securities, LLC

as under penetrated growth opportunities; 3) Targeting loyalty programs in all top 20 Taylor.Brimberg@wellsfargo.com | 212-214-2078

markets by end of '26; 4) Boneless chicken is expected to become a larger component on David Lantz

menus globally as consumers continue to pivot relative to bone-in. Equity Analyst | Wells Fargo Securities, LLC

David.Lantz@wellsfargo.com | 212-214-5044

Jessica Louie

YUM shares more interesting, but category headwinds limit upside.