With brands like KFC, Taco Bell and Pizza Hut under its umbrella, one thing Yum Brands definitely doesn’t lack is recognition. The company operates over 59,000 restaurants in more than 155 countries and its annual sales amounted to over $7.5B in 2024. It is precisely its global recognition and scale, which make the company’s consistent and reliable results possible. They, in turn, helped the stock nearly triple from its pandemic low.
YUM rose from just under $55 a share in March, 2020, to over $163 in March, 2025. Including the dividends, total investor returns exceeded 200% over those five years. Now that the stock has dropped below $145 again, many are probably wondering if this dip is a buying opportunity. We don’t think so, and here is why.
The recovery from the bottom in 2020 can easily be seen as a simple (a)-(b)-(c) zigzag, whose wave (b) is a triangle correction, marked a-b-c-d-e. Triangles have a special place in the Elliott Wave catalogue. They precede the final wave of the larger sequence, allowing us to put everything else into place, as well. Here, a triangle in the middle of the post-pandemic recovery indicates that a bigger correction has been in progress since the top in September, 2019.
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An expanding or a running flat retracement, whose wave C down has yet to take place, make a lot of sense. In both cases, a notable selloff can be expected in Yum Brands stock. Now, we understand that making such bold predictions based solely on a price chart doesn’t sound serious to many. The thing is that we’ve already seen how this precise pattern has unfolded before. It warned us about a major selloff ahead for the S&P 500 and the DJIA just before Covid struck.
The two major US stock market indices drew the same (a)-(b)-(c) zigzag with a triangle in the middle just before the coronavirus panic erased more than a third of their value in March, 2020. Of course, in the case of Yum Brands, the anticipated decline is likely to be the result of something entirely company-specific. What matters is that the setup is the same. Maybe investors would simply realize that paying 27 times free cash flow for a mid-single digit revenue grower is just not worth the risk.
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