General Manager At Yum China Holdings Buys $127K of Stock

Disclosed in the latest SEC filing, a significant insider purchase on August 14, involves Jeff Kuai, General Manager at Yum China Holdings YUMC.

What Happened: In a Form 4 filing on Wednesday with the U.S. Securities and Exchange Commission, it was disclosed that Kuai bought 3,900 shares of Yum China Holdings, amounting to a total of $127,605.

Yum China Holdings shares are trading up 1.32% at $33.75 at the time of this writing on Wednesday morning.

Delving into Yum China Holdings's Background

With almost 13,000 units and USD 10 billion in systemwide sales in 2022, Yum China is the largest restaurant chain in China. It generates revenue through its own restaurants and franchise fees. Key concepts include KFC (9,094 units) and Pizza Hut (2,903), but the company's portfolio also includes other brands such as Little Sheep, East Dawning, Taco Bell, Huang Ji Huang, COFFii & Joy, and Lavazza (collectively representing about 950 units). Yum China is a trademark licensee of Yum Brands, paying 3% of total systemwide sales to the company it separated from in October 2016.

A Deep Dive into Yum China Holdings's Financials

Revenue Growth: Yum China Holdings's revenue growth over a period of 3 months has been noteworthy. As of 30 June, 2024, the company achieved a revenue growth rate of approximately 0.94%. This indicates a substantial increase in the company's top-line earnings. When compared to others in the Consumer Discretionary sector, the company faces challenges, achieving a growth rate lower than the average among peers.

Evaluating Earnings Performance:

• Gross Margin: The company faces challenges with a low gross margin of 16.46%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): The company excels with an EPS that surpasses the industry average. With a current EPS of 0.55, Yum China Holdings showcases strong earnings per share.

Debt Management: Yum China Holdings's debt-to-equity ratio is below industry norms, indicating a sound financial structure with a ratio of 0.47.

Financial Valuation Breakdown:

• Price to Earnings (P/E) Ratio: With a lower-than-average P/E ratio of 16.01, the stock indicates an attractive valuation, potentially presenting a buying opportunity.

• Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 1.23, the stock presents an attractive valuation, potentially signaling a buying opportunity for investors interested in sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Yum China Holdings's EV/EBITDA ratio, lower than industry averages at 8.37, indicates attractively priced shares.

Market Capitalization Analysis: With a profound presence, the company's market capitalization is above industry averages. This reflects substantial size and strong market recognition.

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Illuminating the Importance of Insider Transactions

In the complex landscape of investment decisions, investors should approach insider transactions as part of a comprehensive analysis, considering various elements.

Within the legal framework, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

A Closer Look at Important Transaction Codes

Taking a closer look at transactions, investors often prioritize those unfolding in the open market, meticulously cataloged in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C denotes the conversion of an option, and transaction code A signifies a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Yum China Holdings's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.