Yum China Holdings, Inc. (YUMC)
Valuation Overview•Is Yum China Holdings, Inc. Overvalued or Undervalued?
Trading at a discount across both intrinsic cash flow and relative peer multiples, indicating a strong margin of safety.
Moderate quality score of 61/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Solid fundamental quality, though profitability presents a headwind.
Wall Street is highly bullish, projecting significant upside with steady expected earnings growth. This outlook is strongly supported by highly attractive capital returns, driven by a balanced mix of reliable dividends and share buybacks.
YUMC demonstrates adequate business quality with stable profitability. This is paired with a moderately leveraged but stable balance sheet.
The company demonstrates solid revenue growth (7.2% 3Y CAGR) paired with highly explosive earnings growth (34.0% EPS 3Y CAGR). Operating efficiency remains adequate with margins around 11.8%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $3.3B | +4.4% | +7.2% | +7.4% | +5.5% | |
| EBITDA | $595.0M | — | +15.7% | — | — | |
| Net Income | $309.0M | +2.0% | +28.1% | — | +11.1% | |
| EPS (Diluted) | $0.87 | +6.8% | +34.0% | +5.1% | +11.5% | |
| Free Cash Flow | $550.0M | +17.6% | +4.6% | +3.9% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 17.2% | 17.1% | 16.1% | 16.5% |
| Operating Margin | 11.8% | 10.9% | 10.7% | 10.6% |
| Net Margin | 7.8% | 7.8% | 7.6% | 7.7% |
| FCF Margin | 9.0% | 6.8% | 6.5% | 7.2% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.85 | $0.87 | +1.9% | ||
| Q1'26 | $0.35 | $0.40 | +14.3% | ||
| Q4'25 | $0.74 | $0.76 | +2.3% | ||
| Q3'25 | $0.57 | $0.58 | +2.5% | ||
| Q2'25 | $0.79 | $0.77 | -2.2% | ||
| Q1'25 | $0.31 | $0.30 | -3.2% | ||
| Q4'24 | $0.68 | $0.77 | +13.2% | ||
| Q3'24 | $0.47 | $0.55 | +17.0% |
Total return is -5.2% (1Y), lagging the benchmark by -26.0%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | -13.6% | -20.9% | — |
| 1Y | -5.2% | -26.0% | +2.4% |
| 3YCAGR | -8.6% | -27.6% | +4.3% |
| 5YCAGR | -7.9% | -19.3% | +5.1% |
| 10YCAGR | +6.0% | -7.7% | — |
The S&P 500 is at 30.6x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Yum China Holdings, Inc. (YUMC) valuation, health, and returns.
Yum China Holdings, Inc. is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. undervalued (implying +18.0% upside to DCF intrinsic value of $48.21)
Yum China Holdings, Inc. has multiple valuation anchors: DCF Intrinsic Value: $48.21 | Peer Relative Fair Value: $65.31 | Wall Street Analyst Target: $61.07 (implying +49.5% upside). A convergence of these signals offers higher conviction.
Yum China Holdings, Inc. displays good financial health with a composite quality score of 61/100, supported by a Altman Z-Score of 3.4 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 13.6%.
Yum China Holdings, Inc. pays a 2.4% dividend yield, covered by a 38% payout ratio with 3 years of growth, supplemented by a 8.0% buyback yield.
Yum China Holdings, Inc.'s current growth trajectory is Decelerating. The company achieved +4.4% 1Y revenue growth and +6.8% 1Y EPS growth, compared to its 3Y revenue CAGR of +7.2%.
Wall Street consensus is Buy based on 19 analysts, beating EPS expectations in 75% of recent quarters with a 4-quarter streak. The consensus price target represents a +49.5% change from current levels.
Investment risks for Yum China Holdings, Inc. include: -30.7% 1-year max drawdown. Volatility risk is characterized by a beta of 0.40x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.