Yum China Holdings, Inc. (YUMC) stock analysis

P/E below its 5-year median

Yum China's P/E of 17.7 is below its own 5-year median of 20.9.

P/E below the industry

Yum China's P/E of 17.7 is below the Eating and Drinking Places median of 28.0.

EV/EBITDA below its 5-year median

Yum China's EV/EBITDA of 9.5 is below its 5-year median of 9.7.

P/B above the industry

Yum China's price-to-book of 3.25 is above the Eating and Drinking Places median of 3.18.

Trading below fair value

The share price of $50.86 is below our fair value estimate of $59.75.

Margin of safety under 20%

The price is 14.9% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 7.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 34.1% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 11.1% over the last twelve months, against a 5-year average of 3.5% a year.

Growing faster than the industry

Revenue grew 9.9% over the last twelve months; the Eating and Drinking Places median is 5.9%.

Guidance lowered

Yum China lowered its 2026 net new stores outlook on Nov 3, 2026.

Gross margin trend

This company does not report gross profit.

Return on equity under 15%

Return on equity was 18.2% over the last twelve months and averaged 13.2% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 23.7%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Yum China's return on equity of 18.2% is above the Eating and Drinking Places median of 7.9%.

Earnings grew over 5 years

Net income grew 3.5% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 7.9% over the last twelve months, against a 5-year average of 7.6%.

Net margin above the industry

Yum China's net margin of 7.9% is above the Eating and Drinking Places median of 1.9%.

Low debt

Debt is 28.9% of shareholders' equity, under the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 104% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.67 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.13; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Yum China paid dividends worth 1.7% of the share price over the last twelve months.

Yield below Treasuries

The 1.7% yield is below the 4.7% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Yum China yields 1.7%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 9 fiscal years.

Covered by earnings

Dividends take 38.5% of net income.

Covered by free cash flow

Dividends take 40.8% of free cash flow.