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what it is
Yum China sells fried chicken, pizza, and other quick meals across China through a giant restaurant network.
how it gets paid
Last year Yum China made $11.8B in revenue. KFC was the main engine at $8.5B, or 72% of sales.
why it's growing
Revenue grew 4.4% last year. Quarterly EPS rose from $0.30 in Q4 2024 to $0.40 in Q4 2025.
what just happened
Yum China posted Q4 EPS of $0.40, ahead of the $0.34 consensus by 17.65%.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
55/100 earnings predictability — expect surprises
20.1x trailing p/e — priced about right
3.2% dividend yield — cash in your pocket every quarter
28.5% return on capital — every dollar works hard here
xvary composite: 59/100 — below average
What they do
Yum China sells fried chicken, pizza, and other quick meals across China through a giant restaurant network.
Scale is the moat. Yum China has 18,101 stores across more than 2,200 cities, including 12,997 KFCs and 4,168 Pizza Huts. That means your delivery radius, supplier network, and brand visibility are already there before a smaller rival opens store number 10. The company also owns and operates 83% of its restaurants, which means direct control over pricing and operations, so what: more of the customer dollar stays in-house.
How they make money
$11.8B
annual revenue · their business grew +4.4% last year
KFC
$8.5B
Pizza Hut
$2.7B
Other brands
$0.6B
Franchise and fees
$0.0B
The products that matter
operates restaurant brands
Restaurant network
18,101 locations · 2,200+ cities
this is the machine. 18,101 stores across more than 2,200 cities give Yum China physical reach that most consumer brands would love to borrow.
scale
core brand footprint
KFC and Pizza Hut
15,000 locations
over 15,000 KFC and Pizza Hut restaurants are the center of gravity. If traffic weakens here, the whole $11.8B revenue base feels it.
core earnings base
company-level earnings engine
Owned operations
$11.8B revenue · ~8.6% net margin
the business is large, but restaurants are still an efficiency game. Net margin in the high single digits (here ~8.6%, aligned to the health panel) means small operating changes can matter more than top-line headlines.
margin watch
Key numbers
28.5%
return on capital
Return on capital → profit earned on money invested → so what: Yum China turns each dollar invested into 28.5 cents of operating payoff, which is strong for restaurants.
16.0%
operating margin
Operating margin → profit after running the restaurants but before taxes and interest → so what: this is healthy for a labor-heavy business.
$21B
2029 revenue goal
That is the revenue forecast for FY2029, up from $11.8B today, so the long-term story still depends on years of steady store growth.
3.2%
dividend yield
Dividend yield → cash paid to you each year as a share of the stock price → so what: you are getting paid while waiting for growth.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 40 / 100
- net profit margin 8.6% — keeps 9 cents of every dollar in revenue
- return on equity 28% — $0.28 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in YUMC 3 years ago → it's now worth $8,830.
The index would have given you $13,880.
source: institutional data · total return
What just happened
beat estimates
Yum China posted Q4 EPS of $0.40, ahead of the $0.34 consensus by 17.65%.
Quarterly EPS rose from $0.30 in Q4 2024 to $0.40 in Q4 2025. Full-year EPS also improved from $2.33 in 2024 to $2.52 in 2025, which fits the steady, not explosive, growth story.
$2.82B
Q4 revenue
$0.40
eps
16.0%
operating margin
the number that mattered
The number that mattered was $0.40 because it beat the $0.34 estimate by 17.65%, showing the profit engine is still running ahead of expectations.
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we have raised our profit forecasts for yum china.given our view that past macro headwinds in china become tailwinds (discussed below), we have lifted our 2026 earnings estimate by a dime, to $2.95 per share.
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we have also introduced forecasts for 2027, which imply bottom-line growth of about 15%, to $3.40 a share, fueled mainly by a double-digit sales increase, a steady profit margin, and robust share repurchases. the outlook for the chinese consumer ought to improve in 2026.over the past several years, the consumer spending environment throughout china has been relatively constrained. the effects of covid, which lingered into 2022-2023, were replaced by a pullback in discretionary expenditures and price wars among dining establishments. these dynamics have put a lid on the company's profit margin and acted as a headwind to franchise-led expansion, from which the effects have only begun to ease. in the current year, as traffic into yum china's restaurants continues to advance, menu-price hikes should become more easily achievable. thus, the improved restaurant-level margins that we anticipate should, in turn, drive the company's near-term earnings higher and help to broaden its base of important licensing partnerships.
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yum china should continue to execute.expanding the unit base by double digits each year has been a top priority since going public nearly 10 years ago.
-
while unit growth remains key, generating steady cash flow is increasingly important.the company's board ensures that discretionary cash is returned to shareholders, via significant buybacks and rising dividends.
-
indeed, we forecast free cash flow of around $1.0 billion in 2026.we think nearly all of that amount will go toward share repurchases, and that cash on hand will help pay the $400 million we expect another dividend hike to cost.
source: company earnings report, 2026
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What could go wrong
the #1 risk is running an $11.8B restaurant business entirely inside one market: China.
med
all roads lead back to China
Yum China is large, but it is not geographically diversified. All $11.8B of revenue depends on one consumer economy, one regulatory system, and one operating environment.
If consumer demand or policy conditions weaken, there is no second region stepping in to offset the hit.
med
high single-digit net margin leaves less room for error than the footprint suggests
A ~8–9% net margin neighborhood is healthy for restaurants, but it is still a restaurant margin. Food, labor, rent, and promotional intensity can move that number faster than investors like.
The business looks huge on revenue. The profit cushion is thinner than the store count makes it seem.
med
18,101 stores means small operating misses become big company misses
This is a scale machine. That helps on sourcing and reach, but it also means traffic, staffing, and store-level execution have to work across more than 2,200 cities.
When a company this large stumbles, the miss shows up in the consolidated numbers fast.
med
predictability is only 55 / 100
This is not a "set it and forget it" earnings profile. The 55/100 predictability score tells you the business can still surprise investors quarter to quarter.
At roughly 20x earnings, repeated small disappointments can matter as much as one big miss.
The entire $11.8B revenue base sits inside the Chinese operating environment, and the current high single-digit net margin does not leave endless room for mistakes.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next quarterly print
The setup is simple: after $0.76 EPS and an 8.8% net margin, investors need to see whether profit growth stops shrinking from a year ago.
margin
net margin trend
7.9% on the full year and 8.8% last quarter are the numbers to watch. This stock gets more interesting if margins rise faster than revenue.
macro
china consumer demand
With all $11.8B of revenue tied to one market, consumer softness in China is not background noise. It is the story.
flow
institutional selling
Two straight quarters of net selling is not a panic signal, but you want to see that trend stabilize if the stock is going to break out of its range.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts see a stock behaving like the market, not leading it.
risk profile
average
stability score 3 — neither especially defensive nor especially fragile.
chart momentum
top 20%
technical score 2 — the chart looks better than the fundamentals feel right now.
earnings predictability
55 / 100
earnings are only moderately predictable. Expect more noise here than in a classic consumer staple.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 260 buyers vs. 280 sellers in 3q2025. total institutional holdings: 0.2B shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$37
$81
$51
current price
$59
target midpoint · +17% from current · 3-5yr high: $120 (+125% · 24% ann'l return)
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