Yum China’s Board Approves $1 Billion Share Buyback Program

Yum China Holdings, Inc. has announced a significant move to enhance shareholder value. On December 12, 2023, the company’s Board of Directors approved a share repurchase program, authorizing the buyback of up to $1 billion in outstanding shares. This initiative allows Yum China to repurchase as much as 5.8% of its shares through open market transactions, a decision often interpreted as a signal that the board views its shares as undervalued.

Analysts Provide Insightful Ratings

The recent buyback plan comes amid a flurry of analyst activity regarding Yum China’s stock. On November 25, 2023, CLSA reaffirmed an “outperform” rating for the company with a price target of $55.00. In contrast, Weiss Ratings maintained a “hold (c)” rating in a report dated October 8, 2023. Currently, one analyst has issued a Strong Buy rating, another has given a Buy rating, and one has rated it as Hold. According to MarketBeat, the stock enjoys an average rating of “Buy” with a consensus target price of $55.00.

Yum China’s Stock Performance and Financial Metrics

As of December 12, Yum China’s stock opened at $48.53. The company has seen a 50-day simple moving average of $45.45 and a 200-day average of $45.11. Its financial indicators reflect stability, with a debt-to-equity ratio of 0.01, a quick ratio of 1.15, and a current ratio of 1.32. Over the past year, the stock has fluctuated between a low of $41.00 and a high of $53.99. Yum China boasts a market capitalization of $17.54 billion, a price-to-earnings ratio of 20.14, and a beta of 0.14.

The company recently reported its quarterly earnings on November 4, 2023, revealing earnings per share (EPS) of $0.76, meeting analysts’ expectations. Additionally, Yum China recorded revenue of $3.21 billion, slightly surpassing the anticipated $3.20 billion. The firm achieved a net margin of 7.81% and a return on equity of 14.08%, marking a year-over-year revenue increase of 4.4%. Analysts predict that Yum China will post $2.54 EPS for the current fiscal year.

Dividend Announcement and Insider Trading Activity

Yum China also disclosed a quarterly dividend of $0.24 per share, set to be paid on December 23, 2023, to shareholders on record as of December 2, 2023. This dividend represents an annualized amount of $0.96, yielding approximately 2.0% based on the current stock price. The company’s payout ratio stands at 39.83%.

In terms of insider trading, Warton Wang, an insider, sold 8,187 shares on November 24, 2023, at an average price of $48.28, totaling $395,268.36. Following this transaction, Wang held 46,847 shares valued at approximately $2.26 million. Another insider, Duoduo (Howard) Huang, sold 4,888 shares on the same day at an average price of $48.10, resulting in a total transaction of $235,112.80. After the sale, Huang owned 22,510 shares worth around $1.08 million. Over the past 90 days, insiders have sold a collective 18,242 shares of Yum China, amounting to $878,397. Currently, insiders hold 0.40% of the company’s stock.

Yum China operates a diverse range of restaurant brands, including KFC, Pizza Hut, Taco Bell, and others, primarily within the People’s Republic of China. The company also manages a mobile e-commerce platform and provides online food delivery services, further expanding its market reach.