Yum China Holdings General Manager Sold $187K In Company Stock

Jeff Kuai, General Manager at Yum China Holdings YUMC, disclosed an insider sell on February 19, according to a recent SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Wednesday showed that Kuai sold 3,900 shares of Yum China Holdings. The total transaction amounted to $187,999.

Monitoring the market, Yum China Holdings's shares down by 1.44% at $48.59 during Wednesday's morning.

Delving into Yum China Holdings's Background

With almost 15,000 units and USD 12 billion in systemwide sales in 2023, Yum China is the largest restaurant operator in China. It generates revenue through its own restaurants and franchise fees. Key concepts include KFC (10,296 units) and Pizza Hut (3,312), but the company's portfolio also includes other brands such as Little Sheep, Taco Bell, Huang Ji Huang, and Lavazza (collectively representing more than 1,000 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 remarkable performance in 3 months is evident. As of 30 September, 2024, the company achieved an impressive revenue growth rate of 5.39%. This signifies a substantial increase in the company's top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Interpreting Earnings Metrics:

• Gross Margin: The company shows a low gross margin of 17.91%, indicating concerns regarding cost management and overall profitability relative to its industry counterparts.

• Earnings per Share (EPS): Yum China Holdings's EPS outshines the industry average, indicating a strong bottom-line trend with a current EPS of 0.77.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.45.

Valuation Metrics:

• Price to Earnings (P/E) Ratio: The P/E ratio of 21.16 is lower than the industry average, implying a discounted valuation for Yum China Holdings's stock.

• Price to Sales (P/S) Ratio: The current P/S ratio of 1.7 is below industry norms, suggesting potential undervaluation and presenting an investment opportunity for those considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio lower than industry benchmarks at 11.16, Yum China Holdings presents an attractive value opportunity.

Market Capitalization Analysis: Above industry benchmarks, the company's market capitalization emphasizes a noteworthy size, indicative of a strong market presence.

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Delving Into the Significance of Insider Transactions

While insider transactions should not be the sole basis for making investment decisions, they can play a significant role in an investor's decision-making process.

In the context of legal matters, the term "insider" refers to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

Pointing towards optimism, a company insider's new purchase signals their positive anticipation for the stock to rise.

Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.

Deciphering Transaction Codes in Insider Filings

Delving into transactions, investors typically prioritize those unfolding in the open market, as precisely outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

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

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