10 Best Restaurant Stocks to Buy Today

6. Yum! Brands, Inc. (NYSE:YUM)

Number of Hedge Fund Holders: 35

With brands like mighty Pizza Hut, much-loved Taco Bell, and everybody’s favorite KFC under its belt, Yum! Brands, Inc. (NYSE:YUM) is one of the 10 Best Restaurant Stocks to Buy Today.

The stock has 35 hedge funds holding stake in it, worth $584.4 million, as of Q1 2024 – this is an increase of two hedge fund holdings, as compared to the previous quarter, which indicates the rising popularity of the stock in the investment sense. Also, another thing that explains why the stock is placed in our list of best restaurant stocks to buy today is its upside potential – the analysts look at the stock price rising to $145.72, as compared to its current price of $129.58, which translates to an upside potential of 12.5%.

Yum! Brands, Inc. (NYSE:YUM) missed the analysts’ expectations for the 1^st quarter of 2024, as it recorded an EPS of $1.15, and a revenue of $1.6 billion, both below analysts’ expectations. Net income saw an uptick to $314 million, growing year over year by 4.6%. The Middle East conflict i.e. Israel-Gaza conflict is one reason that the company believes has driven this timid growth in the quarter.

However, the following is what the company’s CFO, Chris Turner, said about the company’s outlook for the year:

“As a reminder, we shared on our last call the intent to purchase 218 KFC UK and Ireland stores. We’re excited to report we officially closed this acquisition at the end of April. These stores have average unit volumes above $2 million and healthy store level cash margins. We expect the addition of these units to provide approximately $40 million of incremental EBITDA in the 12 months after acquisition while the benefit to our operating profit will be largely offset over the next several years due to depreciation and amortization, including amortization of reacquired franchisees.

We are confident that 2024 will showcase a strong unit development story at or above 5% unit growth, led by KFC International as franchisees capitalize on our brand’s attractive paybacks. In the U.S., Taco Bell continues to balance core everyday value to cater to a more discerning consumer across income groups with premium innovation to attract new consumers. We expect full year Taco Bell company-operated margins to be in the range of 23% to 24%. Excluding the 53rd week, we now expect ex special G&A to be flat to down slightly for the year, including incremental G&A associated with the KFC UK acquisition. Finally, we are confident we will deliver at least 8% core operating profit growth excluding the benefit of the 53rd week.”