Yum China Holdings (YUMC) AI Stock Analysis

• Market Cap: $17.07B
• Dividend Yield: 1.98%
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 19.6
• Beta (1Y): 0.46
• Revenue Growth: 3.29%
• EPS Growth: 6.72%
• Country: US
• Employees: 140,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.76
• Shares Outstanding: 361,419,220
• 10 Day Avg. Volume: 799,801
• 30 Day Avg. Volume: 1,156,534
• PEG Ratio: 1.13
• Price to Book (P/B): 3.26
• Price to Sales (P/S): 1.65
• P/FCF Ratio: 26.18
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 1.44
• Enterprise Value/Gross Profit: 8.39
• Enterprise Value/Ebitda: 9.46
• 1Y Price Target: $56.42
• Price Target Upside: 16.00% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 78 Outperform
• Price Target: $55.00 ▲(13.08% Upside)

Yum China Holdings receives a strong overall score driven by robust financial performance and positive earnings call sentiment. Technical analysis supports a bullish outlook, while valuation metrics suggest fair pricing. Challenges in delivery costs and investment impacts are noted but do not significantly detract from the company's strong market position.

Positive Factors

Store Expansion

Yum China's aggressive store expansion strategy enhances its market presence and long-term growth potential, aiming for 20,000 stores by 2026.

Revenue Growth

Consistent revenue growth reflects effective business strategies and strong demand, supporting long-term financial stability and market leadership.

Cash Flow Generation

Strong cash flow generation supports operational and strategic initiatives, providing financial flexibility and resilience against market fluctuations.

Negative Factors

Delivery Cost Challenges

Rising delivery costs could pressure margins, challenging profitability as delivery becomes a larger part of the business model.

Impact of Meituan Investment

The negative impact from Meituan investment highlights potential risks in strategic partnerships, affecting financial performance and investor confidence.

Decreasing Ticket Averages

Falling ticket averages indicate potential challenges in maintaining customer spending levels, which could impact revenue and profitability.

Yum China Holdings Business Overview & Revenue Model

Company Description

Yum China Holdings, Inc. owns, operates, and franchises restaurants in China. The company operates through two segments, KFC and Pizza Hut. It operates restaurants under the KFC, Pizza Hut, Little Sheep, Huang Ji Huang, Lavazza, COFFii & JOY, Taco Bell, and East Dawning brands, which specialize in chicken, pizza, hot pot cooking, simmer pot, Italian coffee, specialty coffee, Mexican-style food, and Chinese food categories. The company also operates V-Gold Mall, a mobile e-commerce platform, which sells electronics, home and kitchen accessories, and other general merchandise, as well as fried rice, steak, pasta and other ready meals, and coffee capsules. In addition, it operates franchise restaurants under the KFC, Pizza Hut, Huang Ji Huang, Taco Bell, Little Sheep, East Dawning, Lavazza, and COFFii & JOY names. As of March 31, 2022, the company operated 12,117 restaurants in approximately 1,700 cities. Yum China Holdings, Inc. was incorporated in 2016 and is headquartered in Shanghai, China.

How the Company Makes Money

Yum China generates revenue primarily through the operation of its company-owned restaurants and the franchising of its brands. The main revenue streams include sales from food and beverages, franchise fees from franchisees, and royalties from franchised restaurants. The company also benefits from its strategic partnerships with suppliers and delivery services, enhancing its operational efficiency and customer reach. Additionally, Yum China invests in digital platforms and technology to streamline ordering and delivery processes, further driving sales and customer engagement. Seasonal menu offerings and promotional campaigns also contribute to revenue growth by attracting new customers and encouraging repeat visits.

Yum China Holdings Financial Statement Overview

Summary

Yum China Holdings presents a strong financial profile with impressive revenue growth and profitability metrics. The balance sheet is robust with low leverage, and cash flow generation is healthy, supporting operational and strategic initiatives. While there are minor pressures on operational efficiency, the overall financial health of the company is commendable, positioning it well in the competitive restaurant industry.

Income Statement

Yum China Holdings shows strong revenue growth with a TTM revenue increase of 18.1% compared to the previous period. The gross profit margin is stable at 12.1%, and the net profit margin is healthy at 7.8%. However, the EBIT margin has decreased slightly to 7.7%, indicating some pressure on operational efficiency. Overall, the company demonstrates robust growth and profitability in the competitive restaurant industry.

Balance Sheet

The company's balance sheet is solid with a debt-to-equity ratio of 0.32, indicating a conservative leverage approach. Return on equity is strong at 15.7%, reflecting efficient use of equity capital. The equity ratio stands at 51.6%, showing a balanced capital structure. While the debt level is manageable, continuous monitoring is advisable to maintain financial stability.

Cash Flow

Yum China Holdings exhibits a positive cash flow trajectory with a 13.6% growth in free cash flow. The operating cash flow to net income ratio is 0.63, indicating good cash generation relative to net income. The free cash flow to net income ratio of 0.58 suggests effective cash management. The company is well-positioned to support its operations and growth initiatives through strong cash flow generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	11.57B	11.30B	10.98B	9.57B	9.85B	8.26B
Gross Profit	1.99B	1.89B	1.89B	1.43B	1.41B	1.27B
EBITDA	1.76B	1.68B	1.59B	1.26B	1.25B	1.16B
Net Income	904.00M	911.00M	827.00M	442.00M	990.00M	784.00M
Balance Sheet
Total Assets	11.03B	11.12B	12.03B	11.83B	13.22B	10.88B
Cash, Cash Equivalents and Short-Term Investments	2.12B	1.84B	2.60B	3.15B	4.00B	4.26B
Total Debt	2.27B	2.41B	2.54B	2.40B	2.83B	2.39B
Total Liabilities	4.65B	4.69B	4.91B	4.67B	5.30B	4.40B
Stockholders Equity	5.69B	5.73B	6.41B	6.48B	7.06B	6.21B
Cash Flow
Free Cash Flow	947.74M	714.00M	763.00M	734.00M	442.00M	695.00M
Operating Cash Flow	1.52B	1.42B	1.47B	1.41B	1.13B	1.11B
Investing Cash Flow	-476.03M	-178.00M	-743.00M	-522.00M	-855.00M	-3.11B
Financing Cash Flow	-1.58B	-1.64B	-716.00M	-844.00M	-313.00M	2.06B

Yum China Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 48.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 48.64 is above the 20-day moving average (MA) of 48.09, above the 50-day MA of 46.90, and above the 200-day MA of 45.15, indicating a bullish trend. The MACD of 0.23 indicates Positive momentum. The RSI at 56.73 is Neutral, neither overbought nor oversold. The STOCH value of 52.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for YUMC.

Yum China Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YUMC	78 Outperform	$17.07B	19.58	15.44%	1.98%	3.29%	6.72%
DRI	76 Outperform	$23.30B	21.21	54.10%	3.06%	8.61%	9.39%
DPZ	68 Neutral	$13.69B	23.67	―	1.63%	3.92%	4.98%
MCD	65 Neutral	$218.86B	26.21	―	2.31%	1.26%	2.87%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
YUM	59 Neutral	$43.18B	30.28	―	1.84%	11.60%	-4.33%
PZZA	57 Neutral	$1.22B	32.89	―	4.72%	-0.64%	-60.71%