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Yum China Holdings (YUMC)
NYSE:YUMC
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Yum China Holdings
(NYSE:YUMC)80Outperform
Positive Factors
Market Position
Yum China is the largest quick service restaurant player in China, highlighting its dominant market position.
Shareholder Value
A significant return of USD 4.5 billion to shareholders is planned through share repurchases and dividends, indicating strong shareholder value.
Negative Factors
Revenue Growth Concerns
A prudent view on revenue growth is warranted in 2025 due to FX and same store sales growth uncertainty and a shift to franchise stores and smaller formats.
Yum China Holdings (YUMC) vs. S&P 500 (SPY)
Market Cap
$18.97B
Dividend Yield1.3%
Average Volume (3M)2.88M
Price to Earnings (P/E)21.6
Beta (1Y)0.56
Revenue Growth2.96%
EPS Growth17.75%
CountryUS
Employees430,000
SectorConsumer Cyclical
Sector Strength53
IndustryRestaurants & Bars
Share Statistics
EPS (TTM)2.33
Shares Outstanding376,124,660
10 Day Avg. Volume3,371,818
30 Day Avg. Volume2,880,272
Financial Highlights & Ratios
PEG Ratio1.22
Price to Book (P/B)N/A
Price to Sales (P/S)1.68
Price to Cash Flow (P/CF)28.40
P/FCF Ratio1026.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$59.07Price Target Upside18.85% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Yum China Holdings Business Overview & Revenue Model
Company DescriptionYum China Holdings, Inc. (YUMC) is a leading restaurant company in China, operating popular brands such as KFC, Pizza Hut, and Taco Bell, along with several local Chinese brands. The company focuses on delivering high-quality, innovative, and localized food offerings through its extensive network of restaurants across the country. Yum China is known for its ability to adapt global brand strategies to the local Chinese market, leveraging its deep understanding of consumer preferences and trends.
How the Company Makes MoneyYum China makes money primarily through the operation of its quick-service and casual dining restaurants, with revenue generated from food and beverage sales. The company benefits from a strong brand portfolio, including KFC and Pizza Hut, which are market leaders in their respective categories in China. Key revenue streams include dine-in, delivery, and digital sales, supported by a robust loyalty program and advanced digital infrastructure. Strategic partnerships with local suppliers and technology companies enhance operational efficiency and customer engagement, contributing to Yum China's financial performance. The company's earnings are also influenced by its ability to innovate menu offerings, optimize its supply chain, and expand its restaurant footprint across diverse regions in China.
Yum China Holdings Financial Statement Overview
Summary
Yum China Holdings demonstrates strong financial health with consistent revenue growth, impressive profitability margins, and effective cash flow management. The balance sheet is solid with moderate leverage, supporting a stable financial structure.Income Statement
Yum China Holdings has shown consistent revenue growth with a 3% increase from 2023 to 2024. The gross profit margin is strong at 100%, indicating efficient cost management. The net profit margin has improved to 8.1% in 2024, reflecting enhanced profitability. EBIT and EBITDA margins are also robust at 10.3%, suggesting healthy operational performance.85
Very Positive
Balance Sheet
The company maintains a stable financial position with a debt-to-equity ratio of 0.35, indicating moderate leverage. The return on equity has strengthened to 15.9%, showcasing effective use of equity to generate profits. An equity ratio of 51.5% reflects a well-capitalized balance sheet, although a slight decline in stockholders' equity is observed.78
Positive
Cash Flow
Cash flow analysis reveals a robust free cash flow increase to $1.419 billion in 2024, driven by strong operating cash flows. The operating cash flow to net income ratio is 1.56, highlighting efficient cash generation relative to net income. The free cash flow to net income ratio of 1.56 indicates strong cash retention capabilities.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 11.30B | 10.98B | 9.57B | 9.85B | 8.26B | Gross Profit |
| 1.89B | 1.88B | 1.33B | 1.36B | 1.27B | EBIT |
| 1.16B | 1.11B | 833.00M | 842.00M | 788.00M | EBITDA |
| 1.68B | 1.59B | 1.72B | 2.29B | 1.86B | Net Income Common Stockholders |
| 911.00M | 827.00M | 442.00M | 990.00M | 784.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.84B | 2.60B | 3.15B | 4.00B | 4.26B | Total Assets |
| 11.12B | 12.03B | 11.83B | 13.22B | 10.88B | Total Debt |
| 1.99B | 2.54B | 2.40B | 2.83B | 2.39B | Net Debt |
| 1.27B | 1.41B | 1.27B | 1.70B | 1.23B | Total Liabilities |
| 4.69B | 4.91B | 4.67B | 5.30B | 4.40B | Stockholders Equity |
| 5.73B | 6.41B | 6.48B | 7.06B | 6.21B |
| Cash Flow | Free Cash Flow | |||
| 1.42B | 763.00M | 734.00M | 442.00M | 695.00M | Operating Cash Flow |
| 1.42B | 1.47B | 1.41B | 1.13B | 1.11B | Investing Cash Flow |
| -178.00M | -743.00M | -504.00M | -818.00M | -3.11B | Financing Cash Flow |
| -1.64B | -716.00M | -862.00M | -350.00M | 2.06B |
Yum China Holdings Technical Analysis
Positive
49.70
Price Trends
46.71
Positive
46.71
Positive
40.58
Positive
Market Momentum
0.81
Negative
58.32
Neutral
79.54
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For YUMC, the sentiment is Positive. The current price of 49.7 is above the 20-day moving average (MA) of 48.33, above the 50-day MA of 46.71, and above the 200-day MA of 40.58, indicating a bullish trend. The MACD of 0.81 indicates Negative momentum. The RSI at 58.32 is Neutral, neither overbought nor oversold. The STOCH value of 79.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for YUMC.
Yum China Holdings Risk Analysis
Yum China Holdings disclosed 78 risk factors in its most recent earnings report. Yum China Holdings reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Yum China Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $18.97B | 21.59 | 15.02% | 1.30% | 2.96% | 17.75% | |
76 Outperform | $221.75B | 27.25 | -216.57% | 2.18% | 1.67% | -1.61% | |
75 Outperform | $44.48B | 30.57 | -19.43% | 1.71% | 6.68% | -7.09% | |
72 Outperform | C$42.81B | 21.76 | 32.83% | 3.57% | 21.63% | -14.75% | |
67 Neutral | $119.80B | 34.08 | -47.07% | 2.24% | -1.48% | -17.32% | |
66 Neutral | $3.00B | 15.82 | 68.30% | 6.60% | 2.98% | -2.58% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
YUMC
Yum China Holdings
49.70
8.60
20.92%
MCD
McDonald's
321.29
33.47
11.63%
SBUX
Starbucks
106.48
16.70
18.60%
WEN
Wendy's
15.53
-1.86
-10.70%
YUM
Yum! Brands
162.53
25.15
18.31%
TSE:QSR
Restaurant Brnd International
95.60
-9.22
-8.80%
Yum China Holdings Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 9.71% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call highlighted a robust performance with record-breaking store openings and strong growth in core operating profit. Despite challenges in maintaining ticket averages and labor cost pressures, the overall sentiment is positive due to significant achievements in sales, profit, and shareholder returns.Highlights
Record-Breaking Year for Store Openings
Opened a record 1,751 net new stores, ending the year with 16,395 stores.
Strong Growth in Core Operating Profit
Core operating profit grew 35% year-over-year in Q4 and 12% for the full year.
Significant Expansion in Delivery Sales
Delivery sales grew 16%, continuing a decade-long double-digit annual growth momentum.
Pizza Hut's Transformation Success
Same-store transactions grew 5%, and restaurant margin expanded by 60 basis points. Core OP more than tripled in Q4 and grew 19% for the full year.
KFC's Continued Growth and Innovation
System sales grew by 6%, and KFC sold 250 million cups of coffee, marking 30% growth.
Increased Capital Returns to Shareholders
Returned $1.5 billion to shareholders in 2024, including increased dividends by 50%.
Lowlights
Challenges in Maintaining Ticket Average
KFC's Q4 ticket average was 4% lower than prior year levels, indicating pricing challenges.
Headwinds in Cost of Labor
Facing ongoing cost pressure from wage inflation and increased delivery mix costs.
Company Guidance
During Yum China Holdings, Inc.'s fourth quarter 2024 earnings call, the company reported several impressive metrics indicating strong performance and strategic progress. System sales grew by 4% year-over-year, with same-store sales index improving to 99% of prior year levels. The restaurant and operating profit margins both expanded significantly, with core operating profit increasing by 35%. Over the full year, Yum China opened a record 1,751 net new stores, bringing the total to 16,395 stores, and achieved an adjusted operating profit of $1.2 billion, marking a 12% increase. Diluted EPS grew by 22%, and the company has experienced eight consecutive quarters of positive transaction growth. KFC's system sales rose by 6%, with delivery sales showing a 16% growth, and Pizza Hut's operating profit more than tripled in Q4, growing 19% for the full year. Capital returns to shareholders amounted to $1.5 billion, including $248 million in dividends and $1.24 billion in share repurchases, with plans to return $4.5 billion from 2024 through 2026. The company is on track to reach 20,000 stores by 2026 and expects to maintain a stable or slightly improved core operating profit margin in 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.