Yum China Holdings, Inc. (YUMC) Fundamental Analysis: Bull vs. Bear Case

YUMC

Yum China Holdings, Inc.

Fundamental data last updated:November 14, 2026

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company profile

SECTOR

Consumer Cyclical

industry

Restaurants

Exchange

NYSE

County of HQ

China

Next Earnings Date

02/03/2027

Business Summary

Yum China's business model revolves around a vast network of popular restaurant brands, including KFC and Pizza Hut, which generate consistent cash flow through a combination of dine-in, delivery, and digital channels. The company's competitive moat is fortified by its extensive supply chain and strong brand recognition, which foster customer loyalty. By leveraging economies of scale and strategic partnerships, Yum China effectively locks in its customer base. This enables the company to maintain a dominant market position and capitalize on growth opportunities in the fast-evolving Chinese consumer market.

VALUATION

P/E

17.20 Market Cap ($M USD)

$16.97B

Forward P/E

16.79 PEG

0.96 PRICE TO SALES

1.34 PRICE TO BOOK

3.16 EV / EBITDA

9.88 5-Year Average P/E

Free Cash Flow Yield

5.62%

DCF Value

$240.84

Graham Number

$32.18

Price to FCF

17.79 EV to FCF

20.70 Earnings Yield

5.92%

FCF Yield

5.62%

DIVIDEND

Yield

2.24%

Annual Payout

$1.11

Payout Ratio

38.71%

Consecutive Years of Dividend Growth

5-Year Dividend Growth Rate

Financial Health & Profitability

Earnings Per Share

$2.94

Next Year EPS Growth Estimate

$2.95

Next Year Revenue Growth Estimate

$12.84B

Return on Equity (ROE)

18.65%

FREE CASH FLOW

Operating Margin

12.33%

Debt-to-Equity

0.62 Piotroski F-Score

6 Altman Z-Score

3.12 Return on Invested Capital (ROIC)

11.39%

Current Ratio

0.67 Quick Ratio

0.55 Net Debt to EBITDA

1.39 Interest Coverage

0.00 Gross Profit margin

17.05%

FCF PER SHARE

$2.79

REVENUE PER SHARE

$37.16

Gainseekers Quantitative Analysis

Summary

Yum China Holdings, Inc. appears to be significantly undervalued when juxtaposed against its DCF value of $240.84 and Graham Number of $32.18. The market’s current pricing suggests a disconnect, potentially underestimating the company’s intrinsic worth. With a Forward P/E of 16.79 and an Earnings Yield of 5.92%, the stock offers a compelling valuation for growth-at-a-reasonable-price (GARP) investors. The Altman Z-score of 3.12 indicates solid financial health, suggesting low bankruptcy risk and a stable growth trajectory. This is a stock that the market may be mispricing, offering a window of opportunity for savvy investors.

AI Exposure / Tech Reliance

Operating in the restaurant industry, Yum China is well-positioned to leverage AI and tech advancements to streamline operations and enhance customer experiences. The integration of AI can optimize supply chain logistics and personalize marketing efforts, driving efficiency. As a leader in a consumer-driven sector, the company can harness technology to maintain its competitive edge and adapt to evolving consumer preferences.

The Bull Case

For the discerning GARP investor, Yum China presents a compelling case. With a robust ROIC of 11.39%, the company demonstrates effective capital allocation and operational efficiency. The FCF Yield of 5.62% underscores its ability to generate cash, while a Piotroski F-Score of 6 indicates solid financial health. Its operating margin of 12.33% reflects strong pricing power, suggesting that the company can sustain profitability even in competitive markets.

The Bear Case

Despite its strengths, Yum China faces notable challenges. The Price/Book ratio of 3.16 and Price/Sales ratio of 1.34 suggest a premium valuation, which may deter value investors. The current ratio of 0.67 and quick ratio of 0.55 highlight liquidity concerns, indicating potential short-term financial strain. Additionally, the stock's proximity to its 52-week high raises questions about its technical overextension, warranting caution for those wary of buying at elevated levels.

Market Sentiment & Smart Money

Short Interest %

Analyst Consensus

Buy

Average Analyst Price Target

$59.00

Institutional Ownership %

1-Year Beta

0.08 Insider Buying % (6 Mo)

Distance to 52-Week High

17.84%

Distance to 52-Week Low

19.85%

EARNINGS SURPRISE %

2.82%

50-DAY SMA

$43.49

200-DAY SMA

$46.85

⚠️ Financial Disclaimer:
This content is for informational purposes only and is not financial advice. Information may be delayed or inaccurate. We may earn a commission from partner links.