Yum China Holdings Estimated Fair Value at $75.05, Current Price Undervalued by 35%
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5d ago
0mins
Source: Yahoo Finance
- Valuation Analysis: Using a two-stage free cash flow model, Yum China's intrinsic value is estimated at $75.05, while the current share price of $49.08 indicates a 35% undervaluation, reflecting market skepticism about its future cash flow potential.
- Future Cash Flow Forecast: Projected free cash flow is expected to grow from $915.8 million in 2026 to $2.34 billion by 2035, indicating significant growth potential that may attract investor interest.
- Terminal Value Calculation: The terminal value is estimated at $40 billion, discounted to a present value of $17 billion, highlighting the company's long-term growth potential, although the current stock price does not reflect this value.
- Industry Comparison: While Yum China's dividends are considered safe, its earnings growth over the past year has underperformed the hospitality industry average, which may affect investor confidence, necessitating attention to the earnings growth forecast for the next four years.
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Analyst Views on YUMC
Wall Street analysts forecast YUMC stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for YUMC is 56.44 USD with a low forecast of 53.06 USD and a high forecast of 61.58 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
16 Analyst Rating
15 Buy
1 Hold
0 Sell
Strong Buy
Current: 50.510
Low
53.06
Averages
56.44
High
61.58
Current: 50.510
Low
53.06
Averages
56.44
High
61.58
About YUMC
Yum China Holdings Inc is a holding company principally engaged in the restaurant operation business. The Company operates three segments, including KFC, Pizza Hut, and All Other segment. KFC segment operates quick-service restaurant, providing original recipe chicken, whole chicken and other chicken products as well as beef burgers, pork, seafood, rice dishes, congees, fresh vegetables, desserts, coffee, tea and many other products. Pizza Hut segment operates casual dining restaurant, offering multiple dayparts, including breakfast, lunch, afternoon tea and dinner. All Other segment includes the operations of Lavazza, Huang Ji Huang, Little Sheep and Taco Bell, delivery operation and e-commerce business.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Broad Peak Sells Entire Stake in Yum China Holdings
- Share Sale Details: Broad Peak Investment Advisers sold all 644,905 shares of Yum China Holdings in Q4 2025, with an estimated trade value of $27.68 million, reflecting the impact of market fluctuations on its portfolio.
- Market Performance Analysis: As of January 28, Yum China's stock was priced at $49.96, up 11.7% over the past year, yet underperforming the S&P 500 by approximately 3.31 percentage points, indicating relative weakness in its market performance.
- Company Financial Overview: Yum China boasts a market capitalization of $17.69 billion, with TTM revenue of $11.57 billion and net income of $904 million, showcasing its robust operational capabilities and cash generation in the Chinese fast-food sector.
- Investor Considerations: Despite Yum China's strong operational performance and a digital sales penetration of 95%, Broad Peak's capital reallocation indicates a preference for higher-conviction investments, highlighting how even well-performing companies can be sidelined due to changing market conditions.
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- Market Penetration: The company entered nine new markets in Q4 last year, expanding its footprint to 60 cities across China, positioning itself as the second-largest pizza chain with a market share of approximately 10%.
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