Yum Brands (YUM) stock is hovering near all-time highs as investors salivate over Taco Bell’s growth potential.
Shares of the Taco Bell parent company have risen more than 17% in the past month, outpacing shares of other quick-service restaurants, such as Restaurant Brands International (QSR) and McDonald’s (MCD), which are both up roughly 5%.
The stock took off following a solid fourth quarter print that beat Wall Street’s expectations across the board. Yum Brands reported better-than-expected international sales, while a strong Taco Bell in the US was the “kicker,” Citi analyst Jon Tower said.
“It’s kind of a confluence of both things coming into play all at once, where global numbers [are] looking better, Taco Bell [is] looking very strong,” Tower told Yahoo Finance over the phone. “When you put them up against almost all the other global quick service or the other domestic quick-service players [in] the fourth quarter, they look phenomenal.”
Analysts have been looking ahead to Taco Bell’s investor event on Tuesday, which was relocated to New York from Los Angeles after the wildfires.
Going into the event, Wall Street has mixed views on whether the stock will continue its run, with seven Buy ratings, 22 Holds, and one Sell. Tower, who downgraded shares earlier this year, even said it has “certainly outperformed.”
JPMorgan analyst John Ivankoe, who has a Neutral rating, told clients following quarterly results that he thought the initial 10% upswing on shares was “overdone on recovery that was largely modeled.”
However, TD Cowen analyst Andrew Charles noted that the Street was reacting positively to Taco Bell’s accelerating same-store sales growth, which has been “bucking the industry trend.”
In the fourth quarter, Taco Bell’s same-store sales jumped 5%, making it the standout versus Yum Brands’ other restaurant chains. Sales growth for KFC and Habit Burger Grill remained flat, while Pizza Hut’s sales growth was negative.
“Taco Bell’s consistent market outperformance, innovative product pipeline, and strategic value positioning set the stage for continued strong growth in 2025,” Yum Brands CEO David Gibbs told investors. For 2025, the company expects Taco Bell to achieve same-store sales growth of 3.7%.
It’s a different narrative for others in the industry, whose stocks have stumbled after earnings amid a more value-conscious consumer and tougher competitive landscape.
Earlier this week, shares of Domino’s (DPZ) faltered after it missed Wall Street’s estimates in its fourth quarter print. Same-store sales increased 0.4% compared to the 1.72% jump the Street predicted.
