Yum China (NYSE:YUMC) announced on December 12, 2023, that its Board of Directors has approved a significant share repurchase program, allowing the company to buy back up to $1 billion in outstanding shares. The plan enables Yum China to repurchase approximately 5.8% of its shares through open market transactions. Historically, share buyback programs suggest that a company’s leadership believes its stock is undervalued, indicating confidence in future growth.
Analyst Ratings and Stock Performance
In light of this announcement, Yum China has garnered attention from analysts, with several reports issued recently. On November 25, CLSA reissued an “outperform” rating, setting a price target of $55.00 for the stock. Conversely, Weiss Ratings issued a “hold (c)” rating on October 8. Currently, one research analyst has assigned a Strong Buy rating, while another rated it as a Buy, and one has issued a Hold rating. Overall, data from MarketBeat indicates an average rating of “Buy” for Yum China, with a consensus target price also set at $55.00.
As of December 12, Yum China’s stock opened at $48.53. The company’s 50-day simple moving average stands at $45.45, while the 200-day simple moving average is at $45.11. The stock has experienced fluctuations over the past year, with a low of $41.00 and a high of $53.99. Yum China’s current market capitalization is approximately $17.54 billion, with a price-to-earnings ratio of 20.14.
Recent Financial Performance and Dividends
Yum China released its quarterly earnings data on November 4, reporting earnings per share (EPS) of $0.76, which matched analysts’ expectations. The company generated revenue of $3.21 billion for the quarter, slightly exceeding forecasts of $3.20 billion. The firm achieved a net margin of 7.81% and a return on equity of 14.08%. Year-over-year, quarterly revenue increased by 4.4%. For the current year, analysts predict that Yum China will report an EPS of 2.54.
In addition to the buyback program, Yum China declared a quarterly dividend of $0.24 per share, scheduled for payment on December 23, 2023. Shareholders recorded as of December 2 will be eligible for this dividend, representing an annualized payout of $0.96 and a dividend yield of 2.0%. The company’s payout ratio currently stands at 39.83%.
Insider trading activity has also been notable. On November 24, insider Warton Wang sold 8,187 shares at an average price of $48.28, totaling approximately $395,268.36. Following this transaction, Wang’s holdings decreased to 46,847 shares, valued around $2,261,773.16. Another insider, Duoduo (Howard) Huang, sold 4,888 shares on the same day for around $235,112.80, reducing his position by 17.84%.
Yum China, headquartered in the People’s Republic of China, operates a wide range of restaurant brands, including KFC, Pizza Hut, Taco Bell, and several others. The company also manages a mobile e-commerce platform and offers online food delivery services, further diversifying its operations in the competitive food service industry.
