YUM CHINA HOLDINGS INC (YUMC) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:YUMC - US98850P1093 - Common Stock
49.08 USD
-0.29 (-0.59%)
49.08 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to YUMC. YUMC was compared to 132 industry peers in the Hotels, Restaurants & Leisure industry. While YUMC has a great health rating, its profitability is only average at the moment. YUMC has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
- YUMC had positive earnings in the past year.
- YUMC had a positive operating cash flow in the past year.
- YUMC had positive earnings in each of the past 5 years.
- YUMC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- Looking at the Return On Assets, with a value of 8.19%, YUMC is in the better half of the industry, outperforming 78.03% of the companies in the same industry.
- With a decent Return On Equity value of 15.88%, YUMC is doing good in the industry, outperforming 72.73% of the companies in the same industry.
- YUMC's Return On Invested Capital of 10.78% is fine compared to the rest of the industry. YUMC outperforms 75.76% of its industry peers.
- YUMC had an Average Return On Invested Capital over the past 3 years of 8.01%. This is below the industry average of 10.36%.
- The last Return On Invested Capital (10.78%) for YUMC is above the 3 year average (8.01%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.19% | ||
| ROE | 15.88% | ||
| ROIC | 10.78% |
ROA(3y)6.27%
ROA(5y)6.7%
ROE(3y)11.88%
ROE(5y)12.46%
ROIC(3y)8.01%
ROIC(5y)7.07%
1.3 Margins
- YUMC has a Profit Margin of 7.81%. This is in the better half of the industry: YUMC outperforms 68.18% of its industry peers.
- YUMC's Profit Margin has been stable in the last couple of years.
- Looking at the Operating Margin, with a value of 11.18%, YUMC is in the better half of the industry, outperforming 62.12% of the companies in the same industry.
- In the last couple of years the Operating Margin of YUMC has remained more or less at the same level.
- YUMC's Gross Margin of 41.58% is on the low side compared to the rest of the industry. YUMC is outperformed by 60.61% of its industry peers.
- YUMC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.18% | ||
| PM (TTM) | 7.81% | ||
| GM | 41.58% |
OM growth 3Y10.45%
OM growth 5Y1.23%
PM growth 3Y-7.08%
PM growth 5Y-0.16%
GM growth 3Y-0.12%
GM growth 5Y-0.93%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so YUMC is still creating some value.
- Compared to 1 year ago, YUMC has less shares outstanding
- YUMC has more shares outstanding than it did 5 years ago.
- YUMC has a better debt/assets ratio than last year.
2.2 Solvency
- YUMC has an Altman-Z score of 3.77. This indicates that YUMC is financially healthy and has little risk of bankruptcy at the moment.
- With an excellent Altman-Z score value of 3.77, YUMC belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
- YUMC has a debt to FCF ratio of 0.09. This is a very positive value and a sign of high solvency as it would only need 0.09 years to pay back of all of its debts.
- YUMC has a better Debt to FCF ratio (0.09) than 93.18% of its industry peers.
- YUMC has a Debt/Equity ratio of 0.01. This is a healthy value indicating a solid balance between debt and equity.
- YUMC has a better Debt to Equity ratio (0.01) than 87.12% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.01 | ||
| Debt/FCF | 0.09 | ||
| Altman-Z | 3.77 |
ROIC/WACC1.44
WACC7.47%
2.3 Liquidity
- A Current Ratio of 1.32 indicates that YUMC should not have too much problems paying its short term obligations.
- Looking at the Current ratio, with a value of 1.32, YUMC is in the better half of the industry, outperforming 65.15% of the companies in the same industry.
- YUMC has a Quick Ratio of 1.15. This is a normal value and indicates that YUMC is financially healthy and should not expect problems in meeting its short term obligations.
- YUMC has a better Quick ratio (1.15) than 63.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.32 | ||
| Quick Ratio | 1.15 |
3. Growth
3.1 Past
- YUMC shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.14%.
- YUMC shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 4.39% yearly.
- Looking at the last year, YUMC shows a small growth in Revenue. The Revenue has grown by 3.29% in the last year.
- Measured over the past years, YUMC shows a small growth in Revenue. The Revenue has been growing by 5.19% on average per year.
EPS 1Y (TTM)6.14%
EPS 3Y24.41%
EPS 5Y4.39%
EPS Q2Q%-1.3%
Revenue 1Y (TTM)3.29%
Revenue growth 3Y4.68%
Revenue growth 5Y5.19%
Sales Q2Q%4.4%
3.2 Future
- YUMC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.58% yearly.
- Based on estimates for the next years, YUMC will show a small growth in Revenue. The Revenue will grow by 6.72% on average per year.
EPS Next Y8.75%
EPS Next 2Y11.54%
EPS Next 3Y11.47%
EPS Next 5Y16.58%
Revenue Next Year2.96%
Revenue Next 2Y4.35%
Revenue Next 3Y4.77%
Revenue Next 5Y6.72%
3.3 Evolution
- 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.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 20.28 indicates a rather expensive valuation of YUMC.
- Based on the Price/Earnings ratio, YUMC is valued a bit cheaper than the industry average as 70.45% of the companies are valued more expensively.
- When comparing the Price/Earnings ratio of YUMC to the average of the S&P500 Index (27.21), we can say YUMC is valued slightly cheaper.
- Based on the Price/Forward Earnings ratio of 16.93, the valuation of YUMC can be described as correct.
- 71.97% of the companies in the same industry are more expensive than YUMC, based on the Price/Forward Earnings ratio.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, YUMC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.28 | ||
| Fwd PE | 16.93 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of YUMC indicates a rather cheap valuation: YUMC is cheaper than 80.30% of the companies listed 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 75.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.85 | ||
| EV/EBITDA | 8.1 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates YUMC does not grow enough to justify the current Price/Earnings ratio.
- YUMC has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.32
PEG (5Y)4.62
EPS Next 2Y11.54%
EPS Next 3Y11.47%
5. Dividend
5.1 Amount
- YUMC has a Yearly Dividend Yield of 2.01%. Purely for dividend investing, there may be better candidates out there.
- YUMC's Dividend Yield is a higher than the industry average which is at 1.21.
- YUMC's Dividend Yield is comparable with the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.01% |
5.2 History
- The dividend of YUMC has a limited annual growth rate of 5.67%.
- YUMC has been paying a dividend for over 5 years, so it has already some track record.
- YUMC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)5.67%
Div Incr Years2
Div Non Decr Years4
5.3 Sustainability
- YUMC pays out 36.39% of its income as dividend. This is a sustainable payout ratio.
- YUMC's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP36.39%
EPS Next 2Y11.54%
EPS Next 3Y11.47%
YUM CHINA HOLDINGS INC / YUMC FAQ
What is the ChartMill fundamental rating of YUM CHINA HOLDINGS INC (YUMC) stock?
ChartMill assigns a fundamental rating of 6 / 10 to YUMC.
Can you provide the valuation status for YUM CHINA HOLDINGS INC?
ChartMill assigns a valuation rating of 5 / 10 to YUM CHINA HOLDINGS INC (YUMC). This can be considered as Fairly Valued.
How profitable is YUM CHINA HOLDINGS INC (YUMC) stock?
YUM CHINA HOLDINGS INC (YUMC) has a profitability rating of 6 / 10.
How financially healthy is YUM CHINA HOLDINGS INC?
The financial health rating of YUM CHINA HOLDINGS INC (YUMC) is 8 / 10.
Is the dividend of YUM CHINA HOLDINGS INC sustainable?
The dividend rating of YUM CHINA HOLDINGS INC (YUMC) is 5 / 10 and the dividend payout ratio is 36.39%.