Yum! Brands YUM OVERVALUED 1.1% Buying Index™ 4 Value …

Valuentum Retail Equity Research Ratings as of 14-May-2021 Data as of 14-May-2021

Buying Index™ 4 Value RatingEconomic CastleVery Attractive

Investment ConsiderationsDCF ValuationRelative Valuation

Stock Chart (weekly) ValueCreation™ValueRisk™ValueTrend™Cash Flow GenerationFinancial LeverageGrowthTechnical EvaluationRelative StrengthMoney Flow Index (MFI)Upside/Downside Volume (U/D)Near-term Technical Support, 10-week MADCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average

Business Quality ValueCreation™

ValueRisk™ Very Poor Poor Good ExcellentCompany Vitals Investment HighlightsMarket Cap (USD) $36,616Avg Weekly Vol (30 wks) 7,58830-week Range (USD) 92.22 - 122.73Valuentum Sector Consumer Discretionary5-week Return 0.8%13-week Return 14.2%30-week Return 18.6%Dividend Yield % 1.7% Firms that generate economic profits with little operating variability score near the top right of the matrix.

Dividends per Share 2.00 Relative Valuation Forward P/E PEG Price / FV

Forward Dividend Payout Ratio 46.9% Disney 85.8 NMF 89.3%Est. Normal Diluted EPS 5.34 Home Depot 26.3 1.9 102.5%P/E on Est. Normal Diluted EPS 22.4 McDonald's 27.1 1.7 109.4%Est. Normal EBITDA 2,321 Nike 43.0 2.5 102.2%Forward EV/EBITDA 23.8 Peer Median 35.1 1.9 102.3%EV/Est. Normal EBITDA 20.1 Yum! Brands 28.0 2.4 126.9%Forward Revenue Growth (5-yr) 6.4% Price / FV = Current Stock Price divided by Estimated Fair Value

Forward EPS Growth (5-yr) 16.8% Financial Summary ProjectedNMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year

Fiscal Year End: Dec-19 Dec-20 Dec-21

Returns Summary 3-year Historical Average Revenue 5,597 5,652 6,370Return on Equity -16.4% Revenue, YoY% -1.6% 1.0% 12.7%Return on Assets 25.5% Operating Income 1,897 1,623 1,796ROIC, with goodwill 61.5% Operating Margin % 33.9% 28.7% 28.2%ROIC, without goodwill 80.9% Net Income 1,294 904 1,295ROIC = Return on Invested Capital; NMF = Not Meaningful Net Income Margin % 23.1% 16.0% 20.3%Leverage, Coverage, and Liquidity Diluted EPS 4.14 2.94 4.26In Millions of USD Diluted EPS, YoY % -11.8% -28.8% 44.7%Total Debt 10,725 Free Cash Flow (CFO-capex) 1,119 1,145 1,269Net Debt 9,995 Free Cash Flow Margin % 20.0% 20.3% 19.9%Total Debt/EBITDA 6.1 In Millions of USD (except for per share items)

Net Debt/EBITDA 5.7 LARGE-CEBITDA/Interest 3.3 NEUTRALCurrent Ratio 1.0Quick Ratio 0.8

Industry $94.00 $71.00 - $118.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending

Visit us at www.valuentum.com

Yum! Brands YUM OVERVALUED 1.1% Estimated Fair Value Fair Value Range Investment Style Sector

EXCELLENTMEDIUM

POSITIVESTRONG

HIGHMODEST

The asset-light nature of Yum! Brands' franchise-oriented business model supports its future free cash flow generating abilities. OVERVALUED

NEUTRAL

BULLISHSTRONG

NEUTRALBULLISH

115.00

The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar).

• Yum! Brands is opening stores at an incredible rate,and the resurgence of Taco Bell in the US (Cantinamenu and breakfast initiatives) has been remarkable.The firm continues to bolster its digital operations andhas had plenty of success on this front of late.

• The reorganization of Yum! Brands' operatingperformance was a precursor to the separation of itsChina division (completed in 2016). It had a franchisemix of ~98% as of the end of 2020 (was ~93% afterthe split in 2016), a move that should improve ROIC.Its Taco Bell division was only ~94% franchised as ofthe end of 2020, offering room for additional upside.

----- Actual -----

• Yum! Brands is targeting a free cash flow conversionrate of 100%+ over the long-term, aided by its asset-light business model and relatively tame capitalexpenditure requirements. The firm leaned heavily onits digital, delivery and drive-thru operations duringthe COVID-19 pandemic to meet customer demand.

Medium 1High

Low• Yum! Brands is the owner of KFC, Taco Bell, andPizza Hut. The firm is the world’s largest quickservice restaurant company based on number ofsystem units. Yum! Brands has a compelling portfolio,and management continues to invest around the world.The company was founded in 1997 and isheadquartered in Louisville, Kentucky. Very High

• Yum! Brands’ capital allocation prioritizes are asfollows: invest in the business with an eye towardsdigital and delivery operations, keep its leverage ratiocontained, pay a competitive dividend, and returnexcess cash to shareholders via stock buybacks.

NMF = Not Meaningful

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Structure of the Restaurants Industry - Fast Food & CoffeeThe restaurant industry has benefited from a long-term trend toward eating out, but the space has become increasingly more competitive as new concepts are introduced and successful chains expand. Not only are there pricing pressures and trade-down threats, but rising costs for commodities and labor have pressured profits. Barriers to entry are low, and many constituents have a difficult time differentiating themselves. We tend to like larger chains that benefit from scale advantages and international expansion opportunities, though niche franchises can be appealing. We’re neutral on the structure of the group.

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Valuentum Retail Equity Research (10=best) Data as of 14-May-2021


Economic Profit Analysis

ValueCreation™ EXCELLENT Return on Invested Capital (ROIC)

ROIC - WACC Spread, 3-year historical average 73.0%ROIC - WACC Spread, 5-year projected average 92.0%These spreads equal the firm's annual average ROIC (excluding goodwill) less its WACC.

ValueTrend™ POSITIVE

Weighted Average Cost of Capital (WACC) The graph above shows the firm's ROIC (excluding goodwill) compared with historical averages and its WACC.

ROIC CalculationFiscal Year End: Dec-18 Dec-19 Dec-20

Earnings before InterestOperating Income after Depreciation 1,763 1,897 1,623- Adjusted Taxes (at 15% of EBIT) 264 285 243+ Amortization 0 0 0+ Non-cash Operating Items -515 -91 255- Minority Interest 0 0 0Earnings before Interest 984 1,521 1,635

Cost of Equity Invested CapitalRisk Free Rate Assumption Inventories 0 0 0Fundamental Beta (ERP multiplier) + Receivables 561 584 534Estimated Equity Risk Premium + Current Deferred Income Taxes 0 0 0Cost of Equity Assumption + Other Current Assets 354 338 425

+ Property, Plant and Equipment, Net 1,237 1,170 1,235After-tax Cost of Debt + Goodwill, Net (Cost in Excess) 525 530 597Risk Free Rate Assumption + Intangibles 242 244 343Synthetic Credit Spread + Non Current Deferred Income Taxes 195 447 553Cost of Debt Assumption - Accounts Payable 980 1,110 1,222Cash Tax Rate Assumption - Other Current Liabilities 0 0 0After-tax Cost of Debt Assumption

Invested Capital, with goodwill 2,134 2,203 2,465Cost of Preferred Stock Invested Capital, without goodwill 1,609 1,673 1,868Preferred DividendsValue of Preferred Stock Return on Invested Capital, with goodwill 44.3% 70.1% 70.0%Cost of Preferred Assumption Return on Invested Capital, without goodwill 57.8% 92.7% 92.3%

In Millions of USD

Weighted Average Cost of Capital (WACC)ERP = Equity Risk Premium

Yum! Brands YUM OVERVALUED 1.1% Estimated Fair Value Fair Value Range Investment Style Sector Industry

Yum! Brands receives a ValueTrend™ rating of POSITIVE, which is based on thecompany's trailing three-year performance. The firm's ROIC (excluding goodwill)increased to 92.3% last year from its trailing 3-year average of 80.9%. We expect ROIC(excluding goodwill) to be in the ballpark of about 115% by the end of our discreteforecast period, with upside potential to about 167% over that time period.

---------- Actual ----------

4.3%

$94.00 $71.00 - $118.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending

The best measure of a firm's ability to create value for shareholders is expressed bycomparing its return on invested capital (ROIC) with its weighted average cost ofcapital (WACC). The gap or difference between ROIC and WACC is called the firm'seconomic profit spread. Yum! Brands' 3-year historical return on invested capital(without goodwill) is 80.9%, which is above the estimate of its cost of capital of 7.9%.As such, we assign the firm a ValueCreation™ rating of EXCELLENT. In the chart tothe right, we show the probable path of ROIC in the years ahead based on the estimatedvolatility of key drivers behind the measure. The solid grey line reflects the most likelyoutcome, in our opinion, and represents the scenario that results in our fair valueestimate.

15.0%7.4%

00

NA

7.9%

0.76.5%8.9%

4.3%4.33%

8.6%


Note: Valuentum may provide an adjusted ROIC measure to better reflect the economic substance of a company's operations, as in the case of companies with negative invested capital.

166.6%

115.1%

57.8%

92.7% 92.3%

63.6%

WACC, 7.9%0.0%

20.0%

40.0%

60.0%

80.0%

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120.0%

140.0%

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77.3%

22.7%Equity

Debt

Preferred

Capital Structure

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Growth Analysis

Revenue Growth MODEST Projected Revenue (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

Revenue3-year Historical

CAGR5-year Projected

CAGRYum! Brands USD 5,652 -1.3% 6.4%

Disney USD 65,388 5.8% 13.7%

Home Depot USD 132,110 9.4% 4.3%

McDonald's USD 18,865 -6.1% 9.6%

Nike USD 37,403 2.9% 11.6%

Peer Median 4.4% 10.6%

Industry Median 3.4% 6.6%

In the chart above, we show our baseline forecast for revenue as well as potential upside and downside cases.

EBITDA Growth Projected EBITDA (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

EBITDA3-year Historical

CAGR5-year Projected

CAGRYum! Brands USD 1,769 -3.0% 8.6%

Disney USD 9,139 -18.1% 36.3%

Home Depot USD 20,797 7.5% 10.4%

McDonald's USD 8,957 -2.8% 15.3%

Nike USD 3,836 -11.1% 28.7%

Peer Median -7.0% 22.0%


In the chart above, we show our baseline forecast for EBITDA as well as potential upside and downside cases.

Net Income Growth Projected Net Income (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year Net Income

3-year Historical CAGR

5-year Projected CAGR

Yum! Brands USD 904 -12.3% 15.6%

Disney USD -2,832 -168.3% -253.9%

Home Depot USD 12,866 14.2% 12.4%

McDonald's USD 4,731 -3.1% 19.0%

Nike USD 2,539 -15.7% 32.7%


Industry Median -6.4% 12.9%

In the chart above, we show our baseline forecast for net income as well as potential upside and downside cases.


Yum! Brands' revenue expansion has trailed the median of both its peer group and itsindustry group during the past three years. We expect the firm's pace of revenue growthto fall below the median of both its peer group and industry group during the next fiveyears. Our growth assessment of each firm is based on the firm's 5-year forwardrevenue CAGR. Yum! Brands' future pace of revenue growth is MODEST, in ouropinion.


Yum! Brands' EBITDA expansion has been greater than that of its peer group but hastrailed that of its industry group during the past three years. We expect the firm's paceof EBITDA growth to fall below that of both its peer group and industry group duringthe next five years. Disney sports the highest expected EBITDA growth rate amongpeers.

Yum! Brands' net income expansion has trailed both that of its peer group and itsindustry group during the past three years. We expect the firm's net income to trail itspeer group but outpace that of its industry group during the next five years. Nike sportsthe highest net income growth rate among peers.


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Cash Flow and Financial Leverage AnalysisCash Flow Generation STRONG Financial Leverage HIGH

The bars above show the firms operating cash flow, capital expenditures, and free cash flow, respectively. The bars above show the firm's annual debt-to-EBITDA. The red line shows the firm's normalized measure.

Cash Flow from Operations Projected Operating Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year CFO


5-year Projected CAGR

Yum! Brands USD 1,305 8.2% 12.4%

Disney USD 7,616 -14.9% 35.6%

Home Depot USD 18,839 16.1% 7.4%

McDonald's USD 6,265 4.1% 17.6%

Nike USD 2,485 -13.5% 37.1%



In the chart above, we show our baseline forecast for CFO as well as potential upside and downside cases.

Free Cash Flow (CFO-capital expenditures) Projected Free Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year FCF


5-year Projected CAGR Source: Company Filings, Valuentum Projections

Yum! Brands USD 1,145 17.2% 12.8%

Disney USD 3,594 -25.6% 50.0%

Home Depot USD 16,376 17.3% 7.7%

McDonald's USD 4,624 7.7% 19.6%

Nike USD 1,399 -20.1% 50.4%



In the chart above, we show our baseline forecast for free cash flow as well as potential upside and downside cases.


Firms that generate a free cash flow margin (free cash flow divided by total revenue)above 5% are usually considered cash cows. Yum! Brands' free cash flow margin hasaveraged about 18.9% during the past 3 years. As such, we think the firm's cash flowgeneration is relatively STRONG. The free cash flow measure shown above is derivedby taking cash flow from operations less capital expenditures and differs fromenterprise free cash flow (FCFF), which we use in deriving our fair value estimate forthe company. For more information on the differences between these two measures,please visit our website at Valuentum.com. At Yum! Brands, cash flow from operationsincreased about 11% from levels registered two years ago, while capital expendituresfell about 32% over the same time period.

Firms that exhibit high leverage tend to be more risky than firms with relatively lowdebt loads, all else equal. We measure financial leverage by taking a firm's currenttotal debt load and dividing it by the firm's trailing average 3-year annual EBITDA.Firms that are over 3 for this metric, we rate as having high leverage. Companies thathave less than 1.5 turns of leverage (or a measure below 1.5), we rate as having lowleverage. Yum! Brands' normalized debt-to-EBITDA measure of about 5.67 puts it inthe HIGH camp.


Yum! Brands' cash flow from operations expansion has been greater than that of itspeer group but has trailed that of its industry group during the past three years. Weexpect the firm's cash flow from operations to trail its peer group but outpace that of itsindustry group during the next five years. Nike sports the highest expected cash flowfrom operations growth rate among peers.

Yum! Brands' free cash flow expansion has been greater than that of its peer group buthas trailed that of its industry group during the past three years. We expect the firm'sfree cash flow to trail its peer group but outpace that of its industry group during thenext five years. Nike sports the highest expected free cash flow growth rate amongpeers.


1,1761,315 1,305

234 196 160

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Cash from Operations Capital Expenditures Free Cash Flow Yum! Brands -normalized

leverage, 5.67

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Yum! Brands- annual leverage Yum! Brands - normalized leverageMedium Threshold HighThreshold

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Valuation Analysis

Valuation Assumptions Valuation BreakdownIn Millions of USD (except for per share items)

Revenue CAGR %Avg. EBIT Margin %Avg. Cash Tax Rate %Earnings Before Interest CAGR %Earnings Per Share CAGR %Free Cash Flow to the Firm CAGR %Earnings before interest = Net operating profits less adjusted taxes

Phase II --> III FCFF CAGR % 2.4% (II) 3% (III)Cost of Equity %After-tax Cost of Debt %Discount Rate (WACC) %Synthetic credit spread = 4.333%

Phase I Present ValuePhase II Present ValuePhase III Present ValueTotal Firm Value

Net Balance Sheet Impact

Total Equity ValueDiluted Shares OutstandingFair Value per Share

DCF Valuation Summary Enterprise Free Cash FlowFiscal Year End: 12/31/2018 12/31/2019 12/31/2020

984 1,521 1,635137 112 146234 196 160104 -107 -162

- Acquisitions 66 0 0717 1,544 1,783

In Millions of USD

Source: Company Filings, Valuentum Projections

Company NameValuentum Buying

Index™Forward Price-to-

Earnings

Price/Earnings-to-Growth (PEG), 5-

yearEV/Est. Normal

EBITDA

5-year Forward Earnings per Share CAGR

3-year Hist Avg ROIC, without

goodwillDividend Yield

%

Stock Price / Fair Value Estimate

Yum! Brands 4 28.0 2.4 20.1 16.8% 80.9% 1.7% 126.9%

Disney 3 85.8 NMF 12.6 -251.2% 15.0% 0.0% 89.3%

Home Depot 7 26.3 1.9 14.8 14.7% 58.8% 1.9% 102.5%

McDonald's 7 27.1 1.7 14.5 21.4% 28.4% 2.2% 109.4%

Nike 6 43.0 2.5 21.6 34.1% 34.2% 0.8% 102.2%

Peer Median 6.5 35.1 1.9 14.6 18.1% 31.3% 1.4% 102.3%

Industry Median 6.0 26.7 2.5 12.6 14.7% 36.7% 0.8% 109.4%



5-year Projections In the chart below, we show the build up to our estimate of total enterprise value forYum! Brands and the break down to the firm's total equity value, which we estimateto be about 28.83USD billion. The present value of the enterprise free cash flowsgenerated during each phase of our model and the net balance sheet impact isdisplayed. We divide total equity value by diluted shares outstanding to arrive at our$94 per share fair value estimate.

6.4%30.1%15.0%

7.9%Results7,589

7.6%16.8%5.5%

Long-term Projections

8.9%4.7%

-9,995

28,827307.0

$94.00

16,08715,14638,822

Company Metrics versus Peer and Industry Medians

P/E on Est. Normal Diluted EPS Forward EV/EBITDA

22.4 23.8

In Millions of USD

---------- Actual ----------

We think Yum! Brands is worth $94 per share with a fair value range of $71.00 -$118.00. The margin of safety around our fair value estimate is driven by the firm'sMEDIUM ValueRisk™ rating, which is derived from an evaluation of the historicalvolatility of key valuation drivers and a future assessment of them. Our near-termoperating forecasts, including revenue and earnings, do not differ much from consensusestimates or management guidance. Our model reflects a compound annual revenuegrowth rate of 6.4% during the next five years, a pace that is higher than the firm's 3-year historical compound annual growth rate of -1.3%. Our model reflects a 5-yearprojected average operating margin of 30.1%, which is below Yum! Brands's trailing 3-year average. Beyond year 5, we assume free cash flow will grow at an annual rate of2.4% for the next 15 years and 3% in perpetuity. For Yum! Brands, we use a 7.9%weighted average cost of capital to discount future free cash flows.

Earnings before Interest+ Depreciation - Capital Expenditures - Change in Working Capital

Enterprise Free Cash Flow (FCFF)

Our future forecasts for key valuation drivers result in a future free enterprise cashflow stream. Above, we show how we calculate enterprise free cash flow and thehistorical performance of the metric for Yum! Brands. Over the next five years, weexpect the firm's enterprise free cash flow to expand at about a 5% compound annualgrowth rate. During years 6 through 20, we expect the measure to grow at a 2.4%rate. Beyond year 20 (in perpetuity), we grow the firm's free cash flow at inflation(3%).

27.4 32.4

21.4 23.7

19.5 16.6

23.4 28.9

19.5 18.5

19.1 18.6

View back of report for a full list of industry constituents covered by Valuentum. VBI: Valuentum's ranking for the attractiveness of this investment at the date of the report.


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Equity Value

Page 5



Margin of Safety Analysis

Range of Potential Outcomes ValueRisk™ MEDIUM

Revenue Volatility 2.2%Gross Margin Volatility 2.6%Earnings (EBI) Volatility 35.8%Cash Flow (FCFF) Volatility 39.2%Fair Value Range 25.0%The Fair Value Range sets the premium or discount on our estimate of the firm's fair value.

Upside and Downside ProbabilitiesProbability (fair value < $0) Less than 0.1%Probability (fair value > 2x current share price) 0.00%

Future Path of Fair Value

The graph above shows the expected future fair value of the firm's shares relative to its current stock price.


Our discounted cash flow process values each firm on the basis of the present value ofall future free cash flows. Although we estimate the firm's fair value at about $94 pershare, every company has a range of probable fair values that's created by theuncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future were known with certainty, we wouldn't see much volatility in themarkets as stocks would trade precisely at their known fair values. Our ValueRisk™rating sets the margin of safety or the fair value range we assign to each stock. In thegraph above, we show this probable range of fair values for Yum! Brands. We think thefirm is attractive below $71 per share (the green line), but quite expensive above $118per share (the red line). The prices that fall along the yellow line, which includes ourfair value estimate, represent a reasonable valuation for the firm, in our opinion.

We strive to answer a few questions that investors often ask: 1) What are the chancesof a total loss of investment in this company? and 2) What is the chance that thecompany is really worth twice what I paid for it? The probability (fair value < 0)strives to answer the first question. It indicates the chance that the firm mayencounter insolvency based on the characteristics of its cash flow stream, capitalstructure, and risk profile. The probability (fair value > 2x current share price) strivesto answer the second question. It is our best estimate of whether investors areparticipating in a half-off sale by buying the company's shares at current prices.

We estimate Yum! Brands' fair value at this point in time to be about $94 per share. Astime passes, however, companies generate cash flow and pay out cash to shareholdersin the form of dividends. The chart to the right compares the firm's current share pricewith the path of Yum! Brands' expected equity value per share over the next three years, assuming our long-term projections prove accurate. The range between the resultingdownside fair value and upside fair value in Year 3 represents our best estimate of thevalue of the firm's shares three years hence. This range of potential outcomes is alsosubject to change over time, should our views on the firm's future cash flow potentialchange. The expected fair value of $116 per share in Year 3 represents our existing fairvalue per share of $94 increased at an annual rate of the firm's cost of equity less itsdividend yield. The upside and downside ranges are derived in the same way, but fromthe upper and lower bounds of our fair value estimate range.



Yum! Brands receives a ValueRisk™ rating of MEDIUM based of the historicalvolatility of key drivers of economic value creation. The fair value range sets themargin of safety around our fair value estimate of the firm's shares.

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Current Share Price, $119

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Technical Analysis

Technical Evaluation BULLISH Money Flow Index (MFI) NEUTRAL

30-week Price and Volume Chart (weekly)Relative Price Strength STRONG

5-week Company Performance 0.8%5-week Market Benchmark Performance 3.4%5-week Relative Performance vs. Market Benchmark -2.7%13-week Company Performance 14.2%13-week Market Benchmark Performance 7.2%13-week Relative Performance vs. Market Benchmark 7.0%30-week Company Performance 18.6%30-week Market Benchmark Performance 19.4%30-week Relative Performance vs. Market Benchmark -0.7%

Upside/Downside Volume BULLISH Timeliness Matrix™ Equity Valuation

Relative Strength

Firms that are undervalued and currently showing near-term pricing strength score near the top right of the matrix.

Yum! Brands YUM OVERVALUED 1.1%

The firm's near-term moving average (5-week, grey line) and medium-term movingaverage (13-week, red line) are shown in the chart above. Typically, when a shorter-term moving average crosses a medium- or longer-term moving average from below, itrepresents a bullish signal. If the short-term moving average crosses from above, tradersoften view this as bearish. Yum! Brands' 5-week moving average resides above its 13-week measure, indicating a BULLISH trend. We'd grow wary of the firm's technicalsshould its 5-week moving average drop below its 13-week moving average, as thefirm's 30-week uptrend could be threatened if this occurs.

The Money Flow Index (MFI) is an oscillator that uses price and volume to measurebuying and selling pressure. Chartists often look for overbought (above 80) andoversold (below 20) levels to warn of unsustainable near-term price extremes. Yum!Brands' MFI of 68 is neutral, suggesting the firm's stock is neither overbought noroversold at this time. However, a score over 50 tends to favor bulls. The MFI can alsobe used to gauge the strength or weakness of a firm's price trend. In Yum! Brands'case, its stock price and money flow neither reveals a bullish nor bearish divergence,further supporting our neutral view on its money flow action.

A firm's relative price strength can be assessed over any number of time horizons. Weshow the firm's performance over the past 5 weeks, 13 weeks, and 30 weeks below.In arriving at our relative strength rating for each company, we assess the past 13weeks, which includes the market's reaction to the firm's most recently reportedquarter, where applicable, and other more recent economic events. During the past 13weeks, Yum! Brands' shares returned 14.2%, while the market benchmark returned7.2%. We think Yum! Brands' 13-week relative price performance is STRONG.

In the chart above, we pinpoint the heaviest accumulation or distribution week of thefirm, determined by the week with the highest trading volume during the past 30 weeks.A heavy accumulation (buying) or distribution (selling) week often determines thefuture near-term direction of the firm's share price, as money managers continue tomove in or out of the stock in the days and weeks ahead driving the stock up or down,respectively. For Yum! Brands, the week with the highest trading volume out of the last30 weeks was a week of heavy buying, or accumulation (green bar). Such marketactivity could indicate a reversal of a downtrend or further confirmation of the firm'suptrend.

Overvalued Fairly Valued Undervalued

Estimated Fair Value Fair Value Range Investment Style Sector Industry $94.00 $71.00 - $118.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending

Weak

Companies that are undervalued and showing near-term relative price strength couldrepresent timely buys, as the stock may be attractive to both value and momentuminvestors. A cross section of the firm's equity valuation and its relative share pricestrength is shown in the matrix above. We tend to prefer undervalued stocks that have strong pricing momentum, also called Valuentum stocks.

The level and trend of the Upside/Downside (U/D) volume ratio reveals whetherinstitutional participation has been bullish or bearish as of late. Yum! Brands' U/Dvolume ratio of 3 is not only greater than 1 but also is better than its trailing average,indicating BULLISH institutional interest during the past several weeks.

Strong 1Neutral


78

88

98

108

118

128

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

5-week Moving Average 13-week Moving

Average

Stock Price

94

99

104

109

114

119

124

129Overbought Line

Oversold Line

7368

0102030405060708090

2.0

3.0

Average, 2.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

- 10-week Moving Average

Page 7



Pro Forma Income Statement -------------------- Historical --------------------

In Millions of USD (except for per share items)Dec-18 Dec-20

Total Revenue 5,688 5,652

Cost of Goods Sold 3,030 2,965

Selling, General and Administrative Expenses 895 1,064

Other Operating Expenses 0 0

Operating Income 1,763 1,623

Unusual items 0 0

Operating Income, including unusual items 1,763 1,623

Interest Expense (452) (543)

Other Non-operating Income 528 (60)

Pre-tax Income 1,839 1,020

Income Taxes 297 116

Income after tax 1,542 904

Minority Interest and Equity Income 0 0

Net Income, excluding extra items 1,542 904

Income Available to Common, excluding extra items 1,542 904

Diluted Earnings per Share, excluding extra items 4.69 2.94

Diluted Weighted Shares Outstanding 329.0 307.0

Source: Company Filings, Xignite, Valuentum Projections


---------- Projected ----------


5,597 6,370 6,758


0 0 0

2,783 3,366 3,535

917 1,208 1,268

0 0 0

1,897 1,796 1,955

1,897 1,796 1,955

(38) 0 0

(486) (272) (272)

79 229 253

1,373 1,524 1,684

0 0 0

1,294 1,295 1,431

1,294 1,295 1,431

1,294 1,295 1,431

313.0 303.9 300.9


4.14 4.26 4.76

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

Page 8



Pro Forma Balance Sheet -------------------- Historical --------------------


AssetsTotal Cash (including marketable securities) 292 730Inventory 0 0Accounts Receivable 561 534Other Current Assets 354 425Total Current Assets 1,207 1,689

Gross Fixed Assets 2,353 2,465(Accumulated Depreciation) (1,116) (1,230)Net Property, Plant, and Equipment 1,237 1,235

Goodwill, Net 525 597Intangibles, Net 242 343Other Long-term Assets 919 1,988Total Assets 4,130 5,852

LiabilitiesAccounts Payable 980 1,222Other Current Liabilities 0 0Current Portion of Long-term Debt 321 453Total Current Liabilities 1,301 1,675

Long-term Debt 9,751 10,272Other Long-term Liabilities 1,004 1,796Total Liabilities 12,056 13,743

Preferred Stock 0 0

Shareholders' EquityCommon Stock and Additional Paid in Capital 0 0Retained Earnings (7,592) (7,480)Other Equity (334) (411)Total Shareholders' Equity (7,926) (7,891)

Total Liabilities and Shareholders' Equity 4,130 5,852

Yum! Brands YUM OVERVALUED 1.1%

---------- Projected ----------


Estimated Fair Value Fair Value Range Investment Style Sector Industry $94.00 $71.00 - $118.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending

0 0 1584 600 634

605 1,025 1,426

2,306 2,726 2,976(1,136) (1,395) (1,569)

338 425 4251,527 2,050 2,486

244 343 3431,760 1,988 1,988

1,170 1,331 1,407

530 597 597

1,110 1,369 1,418

5,231 6,310 6,821

1,541 1,811 1,874

0 (11) 3431 453 453

13,247 13,879 13,942

10,131 10,272 10,2721,575 1,796 1,796

0 0 0(7,628) (6,792) (5,981)

0 0 0

5,231 6,310 6,821

(388) (777) (1,140)(8,016) (7,570) (7,121)




Page 9



Pro Forma Cash Flow Statement -------------------- Historical --------------------


Cash from OperationsNet Income 1,542 904Depreciation and Amortization 137 146Deferred Income Taxes (11) 0Operating Gains Or Losses (515) 255Changes in Working Capital 23 0

Cash Flow from Operations 1,176 1,305

Cash from InvestingPurchase of Property, Plant, Equipment (234) (160)Other Investing Cash Flows 547 (175)Cash Flow from Investing 313 (335)

Cash from FinancingIssuance (Retirement) of Stock (2,390) (239)Issuance (Retirement) of Debt 292 128Dividends Paid (462) (566)Other Financing Cash Flows (60) (61)Cash Flow from Financing (2,620) (738)

Foreign Exchange (63) 24

Net Change in Cash (1,194) 256




---------- Projected ----------

112 165 1750 0 0

1,294 1,295 1,431

1,315 1,530 1,634

(91) 0 00 70 28

(88) (261) (250)

(196) (261) (250)108 0 0

(511) (608) (620)(85) 0 0

(815) (366) (362)473 0 0

5 0 0

294 295 401

(938) (974) (982)




Page 10



Discretionary SpendingDiscretionary Spending FAIRLY VALUED

Company Name TickerMarket Cap (USD-

mil) DCF Valuation ValueCreation™ ValueRisk™ ValueTrend™ Technicals Relative Strength

Activision ATVI 72,992 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE VERY BULLISH WEAK

AutoZone AZO 36,485 FAIRLY VALUED EXCELLENT LOW POSITIVE NEUTRAL STRONG

Best Buy BBY 31,665 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH WEAK

CarMax KMX 20,614 FAIRLY VALUED VERY POOR MEDIUM POSITIVE BEARISH WEAK

Chipotle CMG 43,829 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH WEAK

Cintas Corp CTAS 38,391 OVERVALUED EXCELLENT LOW POSITIVE BULLISH WEAK

Cracker Barrel CBRL 3,730 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Dick's Sporting DKS 8,086 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Disney DIS 313,317 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Dollar General DG 55,067 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Dollar Tree DLTR 26,371 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE VERY BEARISH WEAK

Domino's Pizza DPZ 15,578 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH WEAK

Estee Lauder EL 108,779 OVERVALUED EXCELLENT MEDIUM NEGATIVE VERY BEARISH WEAK

Ford F 47,040 FAIRLY VALUED GOOD VERY HIGH POSITIVE BEARISH WEAK

General Motors GM 80,752 FAIRLY VALUED POOR MEDIUM POSITIVE BEARISH NEUTRAL

Genuine Parts GPC 19,149 OVERVALUED EXCELLENT LOW POSITIVE NEUTRAL STRONG

Hasbro HAS 13,246 FAIRLY VALUED EXCELLENT LOW POSITIVE VERY BEARISH NEUTRAL

Home Depot HD 365,712 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Leggett & Platt LEG 7,661 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Lowe's LOW 156,300 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH STRONG

McDonald's MCD 173,101 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Netflix NFLX 228,848 FAIRLY VALUED VERY POOR HIGH POSITIVE BEARISH WEAK

Nike NKE 216,346 FAIRLY VALUED EXCELLENT LOW NEGATIVE VERY BULLISH WEAK

Ralph Lauren RL 7,372 FAIRLY VALUED EXCELLENT LOW NEGATIVE BULLISH STRONG

Ross Stores ROST 46,278 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH STRONG

Starbucks SBUX 137,651 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Tesla TSLA 638,688 FAIRLY VALUED EXCELLENT HIGH POSITIVE BEARISH WEAK

TJX Cos TJX 87,981 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH NEUTRAL

Ulta Salon ULTA 18,341 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH WEAK

VF Corp VFC 34,150 FAIRLY VALUED EXCELLENT LOW NEGATIVE BULLISH NEUTRAL

Whirlpool WHR 15,617 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH STRONG

Williams-Sonoma WSM 13,579 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Yum! Brands YUM 36,616 OVERVALUED EXCELLENT MEDIUM POSITIVE BULLISH STRONG


We think the Discretionary Spending industry is fairly valued at this time. Theindustry's market cap is trading between 80% and 120% of our estimate of its fair valuebased on our DCF process. Although we use a firm-specific ValueRisk™ measure todetermine whether a firm is undervalued or overvalued based on our DCF process, weconsider an industry to be undervalued if it is trading below 80% of our estimate of itsfair value and overvalued if it is trading at over 120% of our estimate of its fair value.We think these fair value ranges are appropriate given the diversification benefits ofholding a basket of stocks. Although there may be individual opportunities within theDiscretionary Spending industry, we don't find the industry as a whole attractive basedsolely on valuation.


LARGE-CAP CORE NEUTRAL


LARGE-CAP GROWTH ATTRACTIVE

The above bar chart reveals the price/fair value of the company, its peers, and the industry as a whole.Shaded blue denotes that the firm has earned the highest rating for that respective category.Investment Style Relative Valuation

LARGE-CAP GROWTH NEUTRAL

MID-CAP VALUE NEUTRAL

MEGA-CAP BLEND UNATTRACTIVE

LARGE-CAP VALUE ATTRACTIVE


LARGE-CAP CORE UNATTRACTIVE

MID-CAP CORE UNATTRACTIVE




LARGE-CAP VALUE ATTRACTIVE


LARGE-CAP GROWTH UNATTRACTIVE


LARGE-CAP GROWTH ATTRACTIVE

MEGA-CAP GROWTH UNATTRACTIVE

LARGE-CAP VALUE NEUTRAL

MEGA-CAP CORE ATTRACTIVE

MID-CAP CORE ATTRACTIVE

LARGE-CAP GROWTH UNATTRACTIVE




MID-CAP VALUE NEUTRAL








126.9%

102.3%109.4%

0%

20%

40%

60%

80%

100%

120%

140%

Yum! Brands Peer Median Discretionary Spending

Page 11

Valuentum's Full Page Stock Report


BA

G

I

N

C

J

D

M

H

E

L

K

A DCF ValuationShows whether the firm is undervalued, fairly valued, or overvalued based on our DCF process and by how much.

B Valuentum Buying Index (VBI)Provides insight into the timeliness of an investment opportunity. We rank firms from 1 to 10 based on rigorous fiancial, valuation, and technical analysis. A 10 represents one of our top picks.

C Valuentum Value Rating (VVR) Indicates whether we think a firm is undervalued, fairly valued, or overvalued on the basis of our DCF process.

D Investment ConsiderationsEvaluates firms on 12 different measures, from the firm's growth and cash flow generation to the stock's money flow index and upside/downside volume. We reveal technical support and resistance levels.

E 30-week Price and Volume ActionDisplays the last accumulation or distribution week of the stock and historical price and volume action.

G Company VitalsShows sector,industry and other relevant company information.

H Business QualitySummary of the firm's ability to create value for shareholders compared wth the underlying risk of its operations.

I Normalized EPS and EBITDAEstimation of the firm's normalized earnings measures and the corresponding valuation mutliples.

J Investment HighlightsOur opinion of the company, including analysis of its financial and technical strengths and weaknesses.

K Relative ValuationComparison of the firm's PE, PEG, and Price/FV ratios versus peers.

L Returns Summary3-year averages of the firm's key return measures, including return on invested capital, with and without goodwill.

M Leverage, Coverage, and LiquidityA snapshot of the company's financial health.

N Financial SummaryA summary of the proforma financial statements found in the extended report.

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Page 12

UNDERVALUED

FAIRLY VALUED

OVERVALUED

• Revenue Volatility • Margin Volatility • Earnings Volatility • Cash Flow Volatility

About Valuentum

@Valuentum, we strive to stand out from the crowd. Mostinvestment research publishers fall into a few camps,whether it be value, growth, income, momentum, chartistor some variant of the aforementioned. We think each inits own right holds merit, but we think the combination ofthese approaches can be even more powerful. After all,stock price movements aren’t just driven by investors ofthe value or growth variety, but by all market participants.Therefore, we look at stocks from a variety of investmentperspectives in order to better understand and identifyideas. We want to provide relevant information.

The core of our process is grounded in rigorous discountedcash flow analysis and incorporates the concept of amargin of safety. We offer a fair value estimate for eachcompany and provide a relative valuation assessment inthe context of a company’s industry and closest peers. Across section of our ValueCreation™ and ValueRisk™ratings provides a financial assessment of a company’sbusiness quality, while our ValueTrend™ rating offersinsight into the trajectory of a firm’s economic profitcreation. The Economic Castle rating measures themagnitude of future economic value generation, and theDividend Cushion ratio assesses the financial capacity of acompany to keep raising its dividend.

Our analysis doesn’t stop there. We also offer a technicalevaluation of the stock as well as other momentumindicators. We not only want to reveal to readers whichfirms may be undervalued, in our view, but we also wantto provide readers with information to help them assessentry and exit points. Most research publishers focus onarriving at a target price or fair value estimate, but mayfall short of providing a technical assessment to bolsterbuy and sell disciplines. We strive to go the distance andprovide readers with answers--not half the story.

An explanation of our approach would not be complete ifwe didn’t describe our ideal stock idea. We’re lookingfor companies that are undervalued--both on a DCF basisand versus peers--have strong growth potential, have asolid track record of creating economic profits forshareholders with reasonable risk, are strong cash flowgenerators, have manageable financial leverage, and arecurrently showing bullish technical and momentumindicators. For dividend growth ideas, we look forcompanies that have both the capacity and willingness tokeep raising the dividend.

Can such stock ideas exist? Subscribe to Valuentum toreceive our best investment ideas and analysis onhundreds of stocks, dividends, ETFs and more.


Historical firm-specific financial data generates our ValueCreation™, ValueRisk™, and ValueTrend™ ratings. The data provides the basis for our financial forecasts. Full annual forecasts of income statement, balance sheet, and cash flow statement items. Firm-specific cost of equity, cost of debt, weighted average cost of capital, and long-term growth and profitability measures estimated.

A complete three-stage free cash flow to the firm valuation model generates an estimate of the firm's equity value per share based on estimated future free cash flows.The volatility of key valuation drivers are estimated and a margin of safety is determined.

The firm's stock price is compared to the suggested margin of safety. If a firm's stock price falls below the lower bound of our estimated fair value range, it receives Valuentum's highest Value Rating.

Financial Forecasts

Financial Statement Analysis

Discounted Cash Flow Valuation

ModelValueRisk™

Rating

Valuentum Value Rating (VVR)

Page 13

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Methodology for Picking Stocks - Valuentum Buying Index™ (VBI)

@ Valuentum, we like to look at companies from anumber of different perspectives. The Valuentum BuyingIndex (VBI) combines rigorous financial and valuationanalysis with an evaluation of a stock's technicals to derivea rating between 1 and 10 for each company. The VBIplaces considerable emphasis on a company's discountedcash-flow (DCF) valuation, its relative valuation versuspeers (both forward PE and PEG ratios), and its technicalsin order to help readers assess entry and exit points on themost interesting ideas.

Let's follow the red line on the flow chart below to seehow a company can score a 10, the best mark on the index(a "Top Pick"). First, the company would need to be'undervalued' on a DCF basis and 'attractive' on a relativevalue basis. The stock would also have to be exhibiting

'bullish' technicals. The firm would need aValueCreation™ rating of 'good' or 'excellent', exhibit'high' or 'aggressive' growth prospects, and generate atleast a 'medium' or 'neutral' assessment for cash flowgeneration, financial leverage, and relative price strength.

This is a tall order for any company. Stocks that don'tmake the cut for a 10 are ranked accordingly, with theleast attractive stocks, in our opinion, garnering a ratingof 1 ("We'd sell"). Most of our coverage universeregisters ratings between 3 and 7, but at any given timethere could be large number of companies garneringeither very high or very low scores, especially at marketlows or tops, respectively.

The Best Ideas Newsletter portfolio puts the VBI intopractice.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

DCF FairlyValued

DCF Undervalued

Relative ValueUnattractive/Neutral

Relative Value Attractive

Relative ValueUnattractive/Neutral


Technicals Bearish: 1

Technicals Neutral: 2

TechnicalsBullish: 4

Technicals Bullish: 7

TechnicalsBearish: 6

Technicals >= BullishValueCreation(TM) >= GoodGrowth >= HighCash Flow Generation >= MediumFinancial Leverage <= MediumRelative Strength >= Neutral

Final Score: 10



TechnicalsBearish: 3

Relative Value Unattractive/Neutral











Initial Index Score

DCF Overvalued

Page 14

GlossaryEstimated Fair Value. This measure is our opinion of the fair equity value per share ofthe company. If our forecasts prove accurate, which may not always be the case, wemay expect a firm's stock price to converge to this value within the next 3 years.

Investment Style. Valuentum uses its own proprietary stock-classification system.Nano-cap: Less than $50 million; Micro-cap: Between $50 million and $200 million;Small-cap: Between $200 million and $2 billion; Mid-cap: Between $2 billion and$10 billion; Large-cap: Between $10 billion and $200 billion; Mega-cap: Over $200billion. Blend: Firm's that we think are undervalued and exhibit high growthprospects (growth in excess of three times the rate of assumed inflation). Value:Firm's that we believe are undervalued, but do not exhibit high growth prospects.Growth: Firms that are not undervalued, in our opinion, but exhibit high growthprospects. Core: Firms that are neither undervalued nor exhibit high growthprospects.

Fair Value Range. The fair value range represents an upper bound and lower bound,between which we would consider the firm to be fairly valued. The range considers ourestimate of the firm's fair value and the margin of safety suggested by the volatility ofkey valuation drivers, including revenue, gross margin, earnings before interest, andenterprise free cash flow (the determinants behind our ValueRisk™ rating).

DCF Valuation. We opine on the firm's valuation based on our DCF process. Firmsthat are trading with an appropriate discount to our fair value estimate receive anUNDERVALUED rating. Firms that are trading within our fair value range receive aFAIRLY VALUED rating, while firms that are trading above the upper bound of ourfair value range receive an OVERVALUED rating.

Company Vitals. In this section, we list key financial information and the sector andindustry that Valuentum assigns to the stock. The P/E-Growth (5-yr), or PEG ratio,divides the current share price by last year's earnings (EPS) and then divides thatquotient by our estimate of the firm's 5-year EPS growth rate. The estimatednormalized diluted EPS and estimated normalized EBITDA represent the five-yearforward average of these measures used in our discounted cash flow model. The P/Eon estimated normalized EPS divides the current share price by estimated normalizeddiluted EPS. The EV/estimated normalized EBITDA considers the current enterprisevalue of the company and divides it by estimated normalized EBITDA. EV is definedas the firm's market capitalization plus total debt, minority interest, preferred stockless cash and cash equivalents.

Relative Value. We compare the firm's forward price-to earnings (PE) ratio and itsprice/earnings-to-growth (PEG) ratio to that of its peers. If both measures fall below thepeer median, the firm receives an ATTRACTIVE rating. If both are above the peermedian, the firm receives an UNATTRACTIVE rating. Any other combination resultsin a NEUTRAL rating.

ValueCreation™. This is a proprietary Valuentum measure. ValueCreation™indicates the firm's historical track record in creating economic value for shareholders,taking the average difference between ROIC (without goodwill) and the firm'sestimated WACC during the past three years. The firm's performance is measured alongthe scale of EXCELLENT, GOOD, POOR, and VERY POOR. Those firms withEXCELLENT ratings have a demonstrated track record of creating economic value,while those that register a VERY POOR mark have been destroying economic value.

Business Quality Matrix. We compare the firm's ValueCreation™ and ValueRisk™ratings. The box is an easy way for investors to quickly assess the business quality ofa company. Firms that generate economic profits with little operating variabilityscore near the top right of the matrix.

Timeliness Matrix. We compare the company's recent stock performance relative tothe market benchmark with our assessment of its valuation. Firms that areexperiencing near-term stock price outperformance and are undervalued by ourestimate may represent timely buys.ValueRisk™. This is a proprietary Valuentum measure. ValueRisk™ indicates the

historical volatility of key valuation drivers, including revenue, gross margin, earningsbefore interest, and enterprise free cash flow. The standard deviation of each measure iscalculated and scaled against last year's measure to arrive at a percentage deviation foreach item. These percentage deviations are weighted equally to arrive at thecorresponding fair value range for each stock, measured in percentage terms. The firm'sperformance is measured along the scale of LOW, MEDIUM, HIGH, and VERY HIGH.The ValueRisk™ rating for each firm also determines the fundamental beta of eachfirm along the following scale: LOW (0.85), MEDIUM (1), HIGH (1.15), VERY HIGH(1.3).

Range of Potential Outcomes. The firm's margin of safety is shown in the graphicof a normal distribution. We consider a firm to be undervalued if its stock price fallsalong the green line and overvalued if the stock price falls along the red line. Weconsider the firm to be fairly valued if its stock price falls along the yellow line.

Return on Invested Capital. At Valuentum, we place considerable emphasis onreturn on invested capital (both with and without goodwill). The measure focuses onthe return (earnings) the company is generating on its operating assets and is superiorto return on equity and return on assets, which can be skewed by a firm's leverage orexcess cash balance, respectively. ValueTrend™. This is a proprietary Valuentum measure. ValueTrend™ indicates the

trajectory of the firm's return on invested capital (ROIC). Firms that earned an ROIClast year that was greater than the 3-year average of the measure earn a POSITIVErating. Firms that earned an ROIC last year that was less than the 3-year average of themeasure earn a NEGATIVE rating.

Technical Evaluation. We evaluate a firm's near-term and medium-term movingaverages and money flow index (MFI) to assign each firm a rating along thefollowing scale: VERY BULLISH, BULLISH, NEUTRAL, BEARISH, and VERYBEARISH.

Cash Flow Generation. Firms' cash flow generation capacity are measured along thescale of STRONG, MEDIUM, and WEAK. A firm with a 3-year historical free cashflow margin (free cash flow divided by sales) greater than 5% receives a STRONGrating, while firms earning less than 1% of sales as free cash flow receive a WEAKrating.

Stock Price Relative Strength. We assess the perfomance of the company's stockduring the past quarter, 13 weeks, relative to an ETF that mirrors the aggregateperformance of constituents of the stock market. Firms are measured along the scaleof STRONG, NEUTRAL, and WEAK. Companies that have outperformed themarket index by more than 2.5% during this 13-week period receive a STRONGrating, while firms that trailed the market index by more than 2.5% during this 13-week period receive a WEAK rating.

Financial Leverage. Based on the firm's normalized debt-to-EBITDA metric, we rank firms on the following scale: LOW, MEDIUM, and HIGH. Companies with a normalized debt-to-EBITDA ratio below 1.5 receive a LOW score, while those with a measure above 3 receive a HIGH score.

Money Flow Index (MFI). The MFI is a technical indicator that measures buyingand selling pressure based on both price and volume. Traders typically use thismeasure to identify potential reversals with overbought and oversold levels. We use a14-week measure to rank firms along the following scale: EXTREMELYOVERBOUGHT (>90), OVERBOUGHT (80-90), NEUTRAL (20-80), OVERSOLD(10-20), EXTREMELY OVERSOLD (0-10).

Upside/Downside Volume. Heavy volume on up days and lower volume on down days suggests that institutions are heavily participating in a stock's upward advance. We use the trailing 14-week average of upside and downside volume to calculate an informative ratio. We rank each firm's U/D volume ratio along the following scale: BULLISH, IMPROVING, DETERIORATING, and BEARISH.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Page 15

YUM Rating History Price Fair Value VBI14-May-21 $119.27 $94.00 430-Apr-21 $119.52 $94.00 47-Oct-20 $93.88 $85.00 716-Jul-20 $89.86 $84.00 723-Oct-19 $109.27 $85.00 18-Apr-19 $99.48 $72.00 719-Nov-18 $87.19 $70.00 313-Jul-18 $79.14 $64.00 49-Mar-18 $82.95 $68.00 627-Oct-17 $75.24 $64.00 321-Jul-17 $74.74 $64.00 510-Mar-17 $64.31 $65.00 43-Oct-16 $87.72 $70.00 36-Jun-16 $83.19 $70.00 7

Disclosures, Disclaimers & Additional SourcesTo send us feedback or if you have any questions, please contact us at [email protected]. We're always looking for ways to better serve your investment needs and improve our research.

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