Wednesday saw Loop Capital maintain a Hold rating on Yum! Brands (NYSE:YUM) with a consistent price target of $140.00.
The firm's analysis highlighted that Taco Bell, a Yum! Brands subsidiary, reported same-store sales growth that surpassed expectations in the fourth quarter of 2024. According to recent discussions with U.S. Taco Bell franchisees, same-store sales saw an increase of 7-8% during this period. The growth exhibited a slight acceleration from approximately 7% in the first half of the quarter to roughly 8% in the latter half.
This performance indicates that the actual sales growth significantly outdid Loop Capital's initial forecast of 5% and the consensus estimate of a 4% rise. On a two-year stacked basis, the 7-8% growth in the fourth quarter translates to a 10-11% gain.
This is a slight decline from the 12% two-year stack reported by Taco Bell in the third quarter of 2024. Nonetheless, the implied three-year stacks of 21-22% in the fourth quarter marked an increase from the 18% reported in the previous quarter.
The firm's decision to maintain the Hold rating and the price target for Yum! Brands is based on an 18 times multiple of the estimated 2025 enterprise value to EBITDA (EV/EBITDA).
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