Investment analysts at HSBC have increased their target price for Yum China (NYSE:YUMC) from $77.90 to $79.20, according to a report released on September 19, 2023. This new target price implies a potential upside of 38.49% from the company’s current trading price.
Shares of Yum China opened at $57.19 on Tuesday, showing a 1-year low of $38.58 and a high of $64.70. The company currently has a market capitalization of $23.80 billion, with a price-to-earnings ratio of 32.31 and a price-to-earnings-growth ratio of 1.37. Its beta is reported as 0.56, indicating lower volatility compared to the overall market. In terms of financial position, Yum China has maintained a low debt-to-equity ratio of 0.01, along with healthy liquidity ratios such as a current ratio of 1.71 and quick ratio of 1.53.
Yum China Holdings, Inc is primarily involved in owning, operating, and franchising restaurants in the People’s Republic of China through its various segments such as KFC, Pizza Hut, and All Other concepts including Taco Bell, Lavazza, Little Sheep, and Huang Ji Huang. Additionally, the company operates an online food delivery service and V-Gold Mall – its mobile e-commerce platform selling electronics, home accessories, kitchen supplies along with various general merchandise.
In its most recent quarterly earnings announcement on July 31st, Yum China reported earnings per share (EPS) of $0.47 for the quarter, surpassing analysts’ consensus estimates by $0.08 per share ($0.39 expected). The company achieved a return on equity (ROE) figure of 10.39% with a net margin of 7.20%. During this period, Yum China generated $2.65 billion in revenue, slightly below the consensus estimate of $2.72 billion. However, these results reflect a 24.4% increase compared to the corresponding quarter in the previous year when earnings per share stood at $0.20.
Based on analysts’ forecasts, Yum China is expected to post earnings per share of 2.06 for the current fiscal year.
Overall, with the upward revision of its target price by HSBC and solid performance figures in recent quarters, Yum China continues to showcase its growth potential in the Chinese restaurant market and its ability to adapt to changing consumer preferences through expanding delivery services and e-commerce platforms.
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Institutional Investors and Hedge Funds Show Confidence in Yum China’s Growth Potential
Yum China, a prominent fast-food company operating in China, recently received a “buy” rating from StockNews.com, as stated in their research report on Thursday, August 17th. This news has garnered attention from several institutional investors and hedge funds who have either increased or reduced their stakes in Yum China.
One notable investor is Core Alternative Capital, which acquired a new position in Yum China during the first quarter of this year, amounting to $25,000. Similarly, Disciplined Investments LLC also acquired a new stake in Yum China during the first quarter worth approximately $25,000. These investments highlight the confidence placed by these institutions in Yum China’s potential for growth and profitability.
Additionally, Norwood Financial Corp purchased a new stake in Yum China during the same period with an investment of about $29,000. Farther Finance Advisors LLC witnessed remarkable growth in its holdings of Yum China stock during the second quarter. With an increase of 116.8%, Farther Finance Advisors now owns 464 shares worth $26,000 after buying an additional 250 shares.
In another significant development, Thomas J. Herzfeld Advisors Inc. saw a staggering increase of 817.3% in its holdings of Yum China stock during the second quarter as well. Their ownership now totals 477 shares valued at $27,000 after acquiring an additional 425 shares.
It is worth noting that institutional investors and hedge funds currently hold approximately 73.91% of Yum China’s stock. This indicates that significant financial entities recognize the potential for success and growth within the company.
Yum China operates various popular brands such as KFC and Pizza Hut across numerous cities in mainland China. As one of the leading quick-service restaurant chains catering to Chinese consumers’ taste preferences, it has gained substantial popularity and brand recognition over the years.
The initiation of coverage by StockNews.com not only highlights the company’s positive outlook but also provides valuable insights for potential investors. With institutional investors and hedge funds showing interest and increasing their stakes, it is evident that Yum China has captured the attention of finance professionals.
September 19, 2023 marks an important date for Yum China, as its promising trajectory continues to attract both domestic and international investment. As the company moves forward, it will be interesting to observe how these recent developments impact its overall performance and position within the market.
