Is Yum! Brands, Inc. overvalued or undervalued?

As of 13 July 2016, the valuation grade for Yum! Brands, Inc. has moved from very attractive to risky, indicating a shift in perception regarding its investment potential. The company is currently overvalued, as evidenced by a P/E ratio of 28, which is higher than its peers such as Darden Restaurants, Inc. at 23.58 and Yum China Holdings, Inc. at 16.99. Additionally, the EV to EBITDA ratio stands at 19.59, further supporting the notion of overvaluation when compared to industry standards.
In terms of financial performance, Yum! Brands, Inc. has a ROCE of 87.95%, which is impressive; however, the negative book value (BV) for ROE raises concerns about its equity position. Recent stock performance shows that Yum! has underperformed against the S&P 500 over the last year and over three and five-year periods, with returns of 11.23%, 25.53%, and 57.70% respectively, compared to 17.14%, 70.41%, and 96.61% for the index. This underperformance reinforces the view that the stock is currently overvalued.