Fubotv earnings beat by $0.10, revenue topped estimates
Investing.com - UBS raised its price target on Yum China Holdings (NYSE:YUMC) to $59.00 from $57.26 on Thursday, while maintaining a Buy rating on the stock. According to InvestingPro data, the company appears undervalued with a PEG ratio of 0.88, suggesting attractive growth potential relative to its current valuation of $15.83 billion.
The investment firm’s analysis suggests Yum China can expand beyond its 2026 target of 20,000 stores to reach 30,000 locations by 2030, based on UBS Evidence Lab data tracking restaurant locations across the country.
UBS projects the share of franchise stores will reach approximately 30% by 2030, double the 2024 level, creating significant capital efficiency benefits that the firm believes are currently underappreciated by market consensus.
The franchise-driven expansion model is expected to generate cash flow at a 12% compound annual growth rate from 2026 to 2030, according to the UBS analysis.
This cash flow generation should support consistently high shareholder returns over the period, the firm noted in its investment rationale for maintaining the Buy rating.
In other recent news, Yum China Holdings, Inc. reported first-quarter earnings that did not meet analyst expectations. The company posted adjusted earnings per share of $0.77, falling short of the consensus estimate of $0.80. Revenue also came in below projections, with a total of $2.98 billion compared to the expected $3.17 billion. Despite these misses, Yum China noted that same-store sales reached 100% of prior year levels for the first time since Q1 2024, and the company achieved its ninth consecutive quarter of same-store transaction growth, with a 6% year-over-year increase in transactions. The company opened 247 net new stores, bringing its total store count to 16,642, contributing to a 2% year-over-year growth in total system sales, excluding foreign currency translation. Operating profit rose 7% year-over-year to $399 million, and the restaurant margin improved by 100 basis points to 18.6%, attributed to savings in food and paper costs as well as occupancy and other operating expenses. Yum China plans to continue its expansion by opening 1,600 to 1,800 net new stores in fiscal 2025 and aims to return $3 billion to shareholders through 2026. The company highlighted its resilience and strategic focus on innovation and operational efficiency amid an uncertain market environment.
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