NYSE:YUMC is an undervalued gem with solid fundamentals.

Last update: Jul 25, 2024

Our stock screening tool has pinpointed YUM CHINA HOLDINGS INC (NYSE:YUMC) as an undervalued stock. NYSE:YUMC maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Assessing Valuation for NYSE:YUMC

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:YUMC was assigned a score of 7 for valuation:

Based on the Price/Earnings ratio, YUMC is valued cheaper than 81.48% of the companies in the same industry.
YUMC is valuated rather cheaply when we compare the Price/Earnings ratio to 24.43, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 11.57, the valuation of YUMC can be described as very reasonable.
Based on the Price/Forward Earnings ratio, YUMC is valued cheaper than 80.74% of the companies in the same industry.
YUMC is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 20.38, which is the current average of the S&P500 Index.
91.85% of the companies in the same industry are more expensive than YUMC, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of YUMC indicates a somewhat cheap valuation: YUMC is cheaper than 74.07% of the companies listed in the same industry.
YUMC has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as YUMC's earnings are expected to grow with 13.51% in the coming years.

A Closer Look at Profitability for NYSE:YUMC

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:YUMC has achieved a 6:

YUMC has a better Return On Assets (7.30%) than 79.26% of its industry peers.
The Return On Equity of YUMC (14.07%) is better than 68.89% of its industry peers.
With a decent Return On Invested Capital value of 8.48%, YUMC is doing good in the industry, outperforming 65.93% of the companies in the same industry.
The 3 year average ROIC (6.34%) for YUMC is below the current ROIC(8.48%), indicating increased profibility in the last year.
YUMC has a better Profit Margin (7.49%) than 66.67% of its industry peers.

Understanding 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:

With an excellent Altman-Z score value of 2.91, YUMC belongs to the best of the industry, outperforming 81.48% of the companies in the same industry.
The Debt to FCF ratio of YUMC is 0.31, which is an excellent value as it means it would take YUMC, only 0.31 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.31, YUMC belongs to the top of the industry, outperforming 94.07% of the companies in the same industry.
YUMC has a Debt/Equity ratio of 0.04. This is a healthy value indicating a solid balance between debt and equity.
YUMC's Debt to Equity ratio of 0.04 is amongst the best of the industry. YUMC outperforms 88.89% of its industry peers.
The Current ratio of YUMC (1.39) is better than 65.93% of its industry peers.
Looking at the Quick ratio, with a value of 1.24, YUMC is in the better half of the industry, outperforming 63.70% of the companies in the same industry.

Growth Analysis for NYSE:YUMC

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:YUMC, the assigned 6 reflects its growth potential:

YUMC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 34.67%, which is quite impressive.
Looking at the last year, YUMC shows a quite strong growth in Revenue. The Revenue has grown by 12.23% in the last year.
The Earnings Per Share is expected to grow by 14.50% on average over the next years. This is quite good.
YUMC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.19% 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.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.