Investors should take note of NYSE:YUMC, a growth stock that remains attractively priced.

Last update: Mar 8, 2024

YUM CHINA HOLDINGS INC (NYSE:YUMC) was identified as an affordable growth stock by our stock screener. NYSE:YUMC is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

A Closer Look at Growth for NYSE:YUMC

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:YUMC was assigned a score of 7 for growth:

YUMC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 90.48%, which is quite impressive.
The Revenue has grown by 14.72% in the past year. This is quite good.
Based on estimates for the next years, YUMC will show a very strong growth in Earnings Per Share. The EPS will grow by 23.40% on average per year.
YUMC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.43% yearly.
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Evaluating Valuation: NYSE:YUMC

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:YUMC has achieved a 5 out of 10:

Based on the Price/Earnings ratio, YUMC is valued a bit cheaper than 67.91% of the companies in the same industry.
YUMC is valuated rather cheaply when we compare the Price/Earnings ratio to 26.03, which is the current average of the S&P500 Index.
Compared to the rest of the industry, the Price/Forward Earnings ratio of YUMC indicates a somewhat cheap valuation: YUMC is cheaper than 63.43% of the companies listed in the same industry.
YUMC's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. YUMC is cheaper than 77.61% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of YUMC indicates a somewhat cheap valuation: YUMC is cheaper than 70.15% of the companies listed in the same industry.
YUMC has a very decent profitability rating, which may justify a higher PE ratio.
YUMC's earnings are expected to grow with 20.49% in the coming years. This may justify a more expensive valuation.

Exploring NYSE:YUMC's Health

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:YUMC, the assigned 7 reflects its health status:

An Altman-Z score of 3.38 indicates that YUMC is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.38, YUMC belongs to the top of the industry, outperforming 83.58% of the companies in the same industry.
YUMC has a debt to FCF ratio of 0.28. This is a very positive value and a sign of high solvency as it would only need 0.28 years to pay back of all of its debts.
The Debt to FCF ratio of YUMC (0.28) is better than 94.78% of its industry peers.
YUMC has a Debt/Equity ratio of 0.03. This is a healthy value indicating a solid balance between debt and equity.
YUMC has a better Debt to Equity ratio (0.03) than 84.33% of its industry peers.
Looking at the Current ratio, with a value of 1.42, YUMC is in the better half of the industry, outperforming 67.91% of the companies in the same industry.
YUMC has a better Quick ratio (1.24) than 65.67% of its industry peers.

Exploring NYSE:YUMC's Profitability

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:YUMC has earned a 6 out of 10:

Looking at the Return On Assets, with a value of 6.87%, YUMC is in the better half of the industry, outperforming 78.36% of the companies in the same industry.
Looking at the Return On Equity, with a value of 12.91%, YUMC is in the better half of the industry, outperforming 69.40% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 8.31%, YUMC is in the better half of the industry, outperforming 67.16% of the companies in the same industry.
The 3 year average ROIC (6.34%) for YUMC is below the current ROIC(8.31%), indicating increased profibility in the last year.
YUMC has a Profit Margin of 7.53%. This is in the better half of the industry: YUMC outperforms 67.91% of its industry peers.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of YUMC

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.