#7 - Yum China Holdings, Inc. (NYSE:YUMC)
Yum China Holdings, Inc. (NYSE: YUMC) - Yum China is the exclusive licensee of KFC and Pizza Hut franchises in China. It may be hard for us in the United States to think of Pizza Hut as upscale, but that’s the case for the franchise in China. That creates both a challenge and an opportunity. But in this large market with such a high potential for growth, investors are excited about the company's new initiatives which include a new store concept for Pizza Hut, a customized menu for both brands to better cater to local tastes, as well as their commitment to using technology to enhance digital and delivery efforts.
Another reason for excitement about Yum China is its aggressive effort to build new restaurants in what is still a developing market. In 2018 alone, the company has opened 365 new locations. That number is already an increase of over 6% from 2017 and it is projected to grow. In fact, Yum China believes the country has the potential to support 20,000 KFC and Pizza Hut stores. On a pretax basis, the company can recoup its investment into these new restaurants in approximately two or three years, providing a hedge against unpredictable same-store sales.
Second-quarter net income increased to $143 million, or $0.36 per share, a year-over-year increase from $125 million or $0.31 per share. The top line showed strength as well with revenue growing to $2.1 billion, a 12 percent year-over-year increase.
About Yum China
Yum China Holdings, Inc owns, operates, and franchises restaurants in the People's Republic of China. The company operates through KFC, Pizza Hut, and All Other segments. It operates restaurants under the KFC, Pizza Hut, Taco Bell, Lavazza, Little Sheep, and Huang Ji Huang concepts. The company also operates V-Gold Mall, a mobile e-commerce platform to sell products; and offers online food deliver services.
Read More - Current Price
- $43.63
- Consensus Rating
- Buy
- Ratings Breakdown
- 4 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $49.57 (13.6% Upside)
China is a complex country, with an equally complex economy. While there are many geopolitical factors that weigh on and will continue to impact China stocks, the sheer size of the market makes it an impossible opportunity to ignore.
The fact is that it’s hard to get an accurate barometer on Chinese stocks because the sheer size of the population skews a lot of our conventional thoughts about growth potential. These growth stocks, however, represent the areas where the Chinese are putting their innovation to work and are trading at levels where analysts see tremendous upside potential.
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