Now trading at a price of $40.51, Yum China has moved -0.9% so far today.
As of April 2023, Yum China shares had a 50-day average price of $49.24. Yum China Holdings, Inc. owns, operates, and franchises restaurants in the People's Republic of China. Based in Shanghai, China, the large-cap Consumer Discretionary company has 400,000 full time employees. Yum China has offered a 1.2% dividend yield over the last 12 months.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $8,415 | $8,776 | $8,263 | $9,853 | $9,569 | $10,573 |
| Revenue Growth | n/a | 4.29% | -5.85% | 19.24% | -2.88% | 10.49% |
| Operating Margins | 11% | 11% | 13% | 14% | 7% | 11% |
| Net Margins | 9% | 8% | 10% | 10% | 5% | 8% |
| Net Income (MM) | $736 | $743 | $813 | $1,023 | $478 | $852 |
| Net Interest Expense (MM) | $36 | $39 | $43 | $60 | $84 | $157 |
| Depreciation & Amort. (MM) | $445 | $428 | $450 | $516 | $602 | $474 |
| Earnings Per Share | $1.79 | $1.84 | $1.95 | $2.28 | $1.04 | $1.85 |
| EPS Growth | n/a | 2.79% | 5.98% | 16.92% | -54.39% | 77.88% |
| Diluted Shares (MM) | 395 | 388 | 402 | 434 | 425 | 412 |
| Free Cash Flow (MM) | $863 | $750 | $695 | $442 | $734 | $749 |
| Capital Expenditures (MM) | $470 | $435 | $419 | $689 | $679 | $669 |
| Current Ratio | 1.56 | 1.3 | 2.39 | 1.98 | 1.82 | 1.59 |
| Long Term Debt (MM) | $25 | $1,632 | $1,988 | $2,531 | $2,122 | $1,990 |
| Net Debt / EBITDA | -0.77 | 0.82 | 1.0 | 1.18 | 1.35 | 1.11 |
Yum China has growing revenues and increasing reinvestment in the business, positive EPS growth, and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a stable trend. Finally, we note that Yum China has irregular cash flows.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Yum China has a trailing twelve month P/E ratio of 26.6, compared to an average of 22.96 for the Consumer Discretionary sector. Based on its EPS guidance of $2.24, the company has a forward P/E ratio of 22.0. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 0.6%. On this basis, the company's PEG ratio is 48.3, which suggests that it is overpriced. In contrast, the market is likely undervaluing Yum China in terms of its equity because its P/B ratio is 2.56 while the sector average is 4.24. The company's shares are currently trading 56.0% above their Graham number.
Yum China Has an Average Rating of Buy:
The 23 analysts following Yum China have set target prices ranging from $43.6 to $78.66 per share, for an average of $63.1 with a buy rating. As of April 2023, the company is trading -22.0% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Yum China has an average amount of shares sold short because 2.1% of the company's shares are sold short. Institutions own 82.6% of the company's shares, and the insider ownership rate stands at 0.19%, suggesting a small amount of insider investors. The largest shareholder is Invesco Ltd., whose 7% stake in the company is worth $1,232,788,075.
