New stores spur Yum China

Article Excerpt

YUM CHINA HOLDINGS INC. $52 is a buy for aggressive investors. The company (New York symbol YUMC; Consumer Sector; Shares outstanding: 421.4 million; Market cap: $21.9 billion; Price-to-sales ratio: 2.3; Dividend yield: 0.9%; TSINetwork Rating: Average; www.yumchina.com) is China’s largest fast-food operator with 12,409 outlets, mainly under the KFC and Pizza Hut banners. Despite COVID-19 lockdowns in China, the company’s sales in the quarter ended September 30, 2022, rose 5.1%, to $2.68 billion from $2.55 billion a year earlier. That’s because it opened 621 new stores (net of closures). On a same-store basis, sales were unchanged, representing flat growth at KFC and a 2% gain at Pizza Hut. Earnings soared 122.7%, to $0.49 a share from last year’s depressed figure of $0.22. Yum China still plans to open between 1,000 and 1,200 net new stores in 2022. It also continues to expand its online ordering and takeout/home delivery services, which is helping the company offset its lower in-store sales. Yum China is a buy for aggressive…