Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Yum! Brands, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 10.9% to 9.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 38, DPO 43, DIO 60). At a 7.9% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $125.68 per share, suggesting YUM is overvalued by 20.0% at the current price of $157.11.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,242 | 2,364 | 2,503 | 2,735 | 2,998 | 3,073 |
| (−) Net Interest | 652 | 687 | 728 | 795 | 872 | 893 |
| (+) D&A | 284 | 310 | 329 | 351 | 386 | 396 |
| EBITDA | 3,179 | 3,361 | 3,559 | 3,882 | 4,256 | 4,362 |
| (−) Tax | 382 | 402 | 426 | 465 | 510 | — |
| (−) CapEx | 356 | 375 | 397 | 434 | 476 | — |
| (−) ΔWC | 1,762 | 63 | 72 | 121 | 137 | — |
| Free Cash Flow (FCF) | 680 | 2,520 | 2,664 | 2,861 | 3,133 | — |
| Peers' EBITDA Multiple | 12.3x | |||||
| Terminal Value | 53,480 | |||||
| WACC / Discount Rate | 7.87% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 655 | 2,249 | 2,204 | 2,195 | 2,228 | 36,617 |
| Enterprise Value | 46,147 | |||||
| Projection Period | 9,531 | 20.7% | ||||
| Terminal Value | 36,617 | 79.3% | ||||
| (−) Current Net Debt | 11,201 | |||||
| Equity Value | 34,946 | |||||
| (÷) Outstanding Shares | 278M | |||||
| Fair Price | $126 | -20.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.3x | 10.3x | 12.3x | 14.3x | 16.3x |
|---|---|---|---|---|---|
| 5.9% | $93 | $117 | $140 | $164 | $188 |
| 6.9% | $88 | $110 | $133 | $155 | $178 |
| 7.9% | $83 | $104 | $126 | $147 | $169 |
| 8.9% | $78 | $98 | $119 | $139 | $160 |
| 9.9% | $73 | $93 | $112 | $132 | $152 |
Current price: $157.11. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.