Critical Analysis: Yum China Holdings (YUMC) and The Competition

Yum China Holdings (NYSE: YUMC) is one of 23 public companies in the “Quick Service Restaurants” industry, but how does it weigh in compared to its competitors? We will compare Yum China Holdings to similar companies based on the strength of its institutional ownership, dividends, risk, profitability, analyst recommendations, valuation and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Yum China Holdings and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum China Holdings 1 3 8 0 2.58
Yum China Holdings Competitors 256 1403 1703 81 2.47

Yum China Holdings currently has a consensus price target of $43.21, indicating a potential upside of 1.67%. As a group, “Quick Service Restaurants” companies have a potential upside of 9.46%. Given Yum China Holdings’ competitors higher probable upside, analysts plainly believe Yum China Holdings has less favorable growth aspects than its competitors.

Institutional & Insider Ownership

77.9% of Yum China Holdings shares are owned by institutional investors. Comparatively, 78.2% of shares of all “Quick Service Restaurants” companies are owned by institutional investors. 0.2% of Yum China Holdings shares are owned by company insiders. Comparatively, 15.6% of shares of all “Quick Service Restaurants” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Yum China Holdings and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yum China Holdings 8.43% 21.35% 14.21%
Yum China Holdings Competitors 7.22% 16.78% 10.21%

Earnings & Valuation

This table compares Yum China Holdings and its competitors top-line revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Yum China Holdings $6.75 billion $502.00 million 28.15
Yum China Holdings Competitors $3.20 billion $441.15 million 141.84

Yum China Holdings has higher revenue and earnings than its competitors. Yum China Holdings is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

Yum China Holdings beats its competitors on 7 of the 12 factors compared.

About Yum China Holdings

Yum China Holdings, Inc. is a restaurant company. The Company’s segments include KFC, Pizza Hut Casual Dining, and All Other Segments, including Pizza Hut Home Service, East Dawning, Little Sheep and Taco Bell. As of December 31, 2016, the Company had over 7,500 restaurants in China. Its restaurant base consists of various restaurant concepts. The Company’s restaurants in each of its concept offer consumers the ability to dine in and/or carry out food. In addition, KFC, Pizza Hut Casual Dining, Pizza Hut Home Service and East Dawning offer delivery service. KFC is the quick-service restaurant (QSR) brand. Pizza Hut Casual Dining is the casual dining restaurant (CDR) brand. As of December 31, 2016, the Company had over 360 Pizza Hut Home Service units in over 50 cities in China. The Little Sheep concept specializes in Hot Pot cooking. East Dawning is a Chinese food QSR brand. Taco Bell is a QSR brand specializing in Mexican-style food.

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