An analyst sees good growth prospects for Yum China Holdings Inc. (YUMC)

Yum China Holdings Inc. (NYSE: YUMC) stock fell -1.70% on Friday to $49.04 against a previous-day closing price of $49.89. With 2.3 million shares changed hands, the volume of the stock remained lighter than its average volume of 2.79 million shares. During the session, the Restaurants company that operates in wider Consumer Cyclical sector, reached to the highest price of $49.74 whereas the lowest price it dropped to was $48.75. The 52-week range on YUMC shows that it touched its highest point at $61.29 and its lowest point at $33.55 during that stretch. It currently has a 1-year price target of $54.64. With its current market cap of 20.87 billion, YUMC has annualized dividend of $0.48 while the current yield stands at 0.98%. Beta for the stock currently stands at 0.53.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of YUMC was down-trending over the past week, with a drop of -1.55%, but this was up by 2.04% over a month. Three-month performance surged to 18.23% while six-month performance rose 7.76%. The stock lost -9.44% in the past year, while it has lost -1.61% so far this year. A look at the trailing 12-month EPS for YUMC yields 1.77 with Next year EPS estimates of 1.85. For the next quarter, that number is 0.33. This implies an EPS growth rate of 17.00% for this year and 84.76% for next year. EPS is expected to grow by 22.33% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 11.10%.

Float and Shares Shorts:

At present, 421.00 million YUMC shares are outstanding with a float of 402.37 million shares on hand for trading. On Jul 14, 2022, short shares totaled 10.41 million, which was 2.47% higher than short shares on Jun 14, 2022. In addition to Ms. Joey Wat as the firm’s CEO & Director, Mr. Ka Wai Yeung serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 86.25% of YUMC’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 48.75% of YUMC, in contrast to 4.20% held by mutual funds. Shares owned by individuals account for 31.46%. As the largest shareholder in YUMC with 9.41% of the stake, Invesco Advisers, Inc. holds 39,476,527 shares worth 39,476,527. A second-largest stockholder of YUMC, Massachusetts Financial Services, holds 17,466,151 shares, controlling over 4.16% of the firm’s shares. T. Rowe Price Associates, Inc. is the third largest shareholder in YUMC, holding 14,413,586 shares or 3.44% stake. With a 7.19% stake in YUMC, the Invesco Developing Markets Fund is the largest stakeholder. A total of 30,183,310 shares are owned by the mutual fund manager. The T Rowe Price Emerging Markets Sto, which owns about 1.40% of YUMC stock, is the second-largest Mutual Fund holder. It holds 5,860,300 shares valued at 293.66 million. Government Pension Fund – Global holds 0.98% of the stake in YUMC, owning 4,111,207 shares worth 206.01 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for YUMC since 25 analysts follow the stock currently. There are 17 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 3 believe that the stock is worth HOLDING, 4 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With YUMC analysts setting a high price target of $62.80 and a low target of $31.00, the average target price over the next 12 months is $54.91. Based on these targets, YUMC could surge 28.06% to reach the target high and fall by -36.79% to reach the target low. Reaching the average price target will result in a growth of 11.97% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. YUMC will report FY 2022 earnings on 02/07/2023. Analysts have provided yearly estimates in a range of $1.40 being high and $0.54 being low. For YUMC, this leads to a yearly average estimate of $0.99. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Yum China Holdings Inc. surprised analysts by $0.21 when it reported $0.20 EPS against a consensus estimate of -$0.00. The surprise factor in the prior quarter was -$0.03. Based on analyst estimates, the high estimate for the next quarter is $0.41 and the low estimate is $0.24. The average estimate for the next quarter is thus $0.33.

Summary of Insider Activity:

Insiders traded YUMC stock several times over the past three months with 0 Buys and 0 Sells. In these transactions, 0 shares were bought while 0 shares were sold. The number of buy transactions has increased to 18 while that of sell transactions has risen to 11 over the past year. The total number of shares bought during that period was 171,443 while 55,242 shares were sold.

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