Don't overlook NYSE:YUMC—a stock with solid growth prospects and a reasonable valuation.

Last update: Apr 3, 2024

Uncover the potential of YUM CHINA HOLDINGS INC (NYSE:YUMC), a growth stock that our stock screener found to be reasonably priced. NYSE:YUMC is excelling in growth aspects, maintaining a healthy financial position, and still offers an attractive valuation. We'll examine each aspect in detail.

Unpacking NYSE:YUMC's Growth Rating

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:YUMC has received a 7 out of 10:

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.
Looking at the last year, YUMC shows a quite strong growth in Revenue. The Revenue has grown by 14.72% in the last year.
The Earnings Per Share is expected to grow by 23.40% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 11.45% on average over the next years. This is quite good.
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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.

How do we evaluate the Valuation for NYSE:YUMC?

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NYSE:YUMC boasts a 5 out of 10:

Compared to the rest of the industry, the Price/Earnings ratio of YUMC indicates a somewhat cheap valuation: YUMC is cheaper than 70.15% of the companies listed in the same industry.
YUMC's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.04.
Based on the Price/Forward Earnings ratio, YUMC is valued a bit cheaper than the industry average as 69.40% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.38, YUMC is valued a bit cheaper.
YUMC's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. YUMC is cheaper than 82.09% of the companies in the same industry.
YUMC's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. YUMC is cheaper than 67.16% of the companies 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 13.62% in the coming years. This may justify a more expensive valuation.

Understanding NYSE:YUMC's Health Score

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:YUMC was assigned a score of 7 for health:

YUMC has an Altman-Z score of 3.30. This indicates that YUMC is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of YUMC (3.30) is better than 82.84% of its industry peers.
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.
YUMC's Debt to FCF ratio of 0.28 is amongst the best of the industry. YUMC outperforms 94.03% 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.
Looking at the Debt to Equity ratio, with a value of 0.03, YUMC belongs to the top of the industry, outperforming 85.82% of the companies in the same industry.
Looking at the Current ratio, with a value of 1.42, YUMC is in the better half of the industry, outperforming 70.15% of the companies in the same industry.
The Quick ratio of YUMC (1.24) is better than 64.93% of its industry peers.

Profitability Insights: NYSE:YUMC

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:YUMC was assigned a score of 6 for profitability:

YUMC's Return On Assets of 6.87% is fine compared to the rest of the industry. YUMC outperforms 78.36% of its industry peers.
YUMC has a Return On Equity of 12.91%. This is in the better half of the industry: YUMC outperforms 68.66% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.31%, YUMC is in the better half of the industry, outperforming 66.42% of the companies in the same industry.
The last Return On Invested Capital (8.31%) for YUMC is above the 3 year average (6.34%), which is a sign of increasing profitability.
YUMC has a better Profit Margin (7.53%) than 65.67% of its industry peers.

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

Our latest full fundamental report of YUMC contains the most current fundamental analsysis.

Keep in mind

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.