YUMC - Yum China: Value And Capital Returns Amid Tougher Macro Environment
2024-02-10 03:00:57 ET
Summary
- Yum China is facing macro headwinds, given China's weakening economy. As such, its stock hasn't performed very well in the past few years.
- Yum China has growth potential, given it plans on increasing the number of stores from 14,644 at the end of 2023 to 20,000 by 2026.
- Given the company's growth, Yum China plans to return over $3 billion in capital back to shareholders from 2024 to 2026, with $1.5 billion expected in 2024.
- I rate Yum China a 'Buy' given its relatively attractive 2025 forward PE ratio of 14.68 and given its long-term EPS growth potential as the Chinese middle class continues to expand.
Yum China Holdings, Inc. (YUMC) is one of the leading Chinese restaurant chains.
The company was spun off from Yum! Brands, Inc. (YUM) in 2016.
Since the spin off, Yum China hasn't done as well as some would have expected. While it is higher than its debut price, it is still nevertheless not done very well in recent years....
Yum China: Value And Capital Returns Amid Tougher Macro Environment