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, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today announced the recent opening of Lavazza's fifth store in Hong Kong. Since opening its first store in Central last November, Lavazza has expanded to five stores in Hong Kong in less than a year and plans to double its presence to around 10 stores in the coming months.

Lavazza's fifth Hong Kong store features a Carmencita moka pot installation Allegra Armitano, Chief Marketing Officer of the Lavazza-Yum China joint venture, said: "Hong Kong is a mature and dynamic coffee market where consumers place a high value on quality, flavor, and brand experience — all of which are central to Lavazza's identity as an iconic Italian coffee brand founded in Turin in 1895. Since opening our first store in Hong Kong, we've been encouraged by the market response. We are excited to introduce our signature Buffalo Milk Latte to Hong Kong and look forward to broadening our offerings for local coffee lovers."

Lavazza's five Hong Kong stores are located primarily in premium office towers and shopping destinations in Central and Causeway Bay. Designed with elegant Italian-inspired interiors, the stores are intended to offer Hong Kong consumers a high-quality coffee experience that fits naturally into the rhythm of urban life.

Among them, the fifth Hong Kong store at Cheung Kong Center II features a Lavazza Carmencita moka pot installation. Designed for Lavazza in 1979 by renowned Italian designer Marco Zanuso, the Carmencita is distinguished by its iconic conical shape and heat-resistant handle. Over the years, it has remained one of Lavazza's most recognizable design symbols.

Introducing Buffalo Milk Latte in Hong Kong

Lavazza has introduced its signature Buffalo Milk Latte across all Hong Kong locations, becoming the first chain coffee brand in Hong Kong to offer buffalo milk drinks. As one of the brand's best-selling beverages in Mainland China — with 2025 sales exceeding 1.2 million cups — the drink brings a distinctive new offering to Hong Kong's coffee market with its naturally sweet, full-bodied flavor and added nutritional appeal.

The Buffalo Milk Latte is made with natural buffalo milk. Compared with regular milk, buffalo milk offers a richer dairy aroma and a naturally sweet, ice cream-like smoothness — without the need for added sugar. Blended with espresso crafted from Lavazza's premium coffee beans, it delivers a rich, velvety mouthfeel that highlights the beans' distinctive flavor notes.

The Buffalo Milk Latte will be available both hot and iced, offering customers a choice between a chilled, refreshing drink and a warm, comforting cup.

Set to Debut Liquid Tiramisu

In addition to the Buffalo Milk Latte, Lavazza's Hong Kong stores offer a wide range of freshly prepared beverages, from classics such as Espresso and Cappuccino to innovative creations like the Sicilian Pistachio Oat Milk Latte, Apple Juice Americano and Orange Juice Americano, all available with a selection of Lavazza premium coffee beans. Desserts, sandwiches and baked goods are also offered.

In the coming months, Lavazza will launch two beverages. One is the Bicerin series, making a comeback this year after first appearing last Christmas season. A traditional hot drink from Turin, Italy, it is made with layers of espresso, cocoa, and cream for a rich and indulgent flavor. The other is Lavazza's much-loved Liquid Tiramisu, which will debut in its Hong Kong stores and bring the signature flavors of the classic Italian dessert into a drink with a creamy texture and rich, layered flavor. As the business continues to grow, Lavazza plans to further expand its Hong Kong menu to cater to a broader range of tastes.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements relating to future strategies, growth, business plans, restaurant expansion plans and operating profit targets, the expected benefits and impact of the acquisition of ownership of the Pizza Hut brand in Mainland China from Yum! Brands, Inc. (the "Transaction") and related financing (including plans for long-term financing), including expected license-fee savings, expected margin benefits, expected EPS accretion, and potential long-term value creation. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the Company's future strategies, growth, business plans, restaurant expansion plans, operating profit targets, the expected benefits and impact of the Transaction and related financing (including plans for long-term financing), including expected license-fee savings, expected margin benefits, expected EPS accretion, and potential long-term value creation. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements. Factors that could cause actual results to differ materially include, among others, risks related to the ability to realize the anticipated benefits of the Transaction, including the risk that the transition of brand ownership disrupts operations; risks related to the availability, terms and cost of long-term debt financing to refinance the bridge loan, including interest rate and currency exchange fluctuations; transaction costs, tax and accounting treatment, changes in consumer demand or competitive conditions, failure to achieve anticipated license-fee savings, margin benefits, or EPS accretion; risks related to the ability to open new restaurants at the anticipated pace and achieve targeted payback periods; and risks that the Transaction may not result in the anticipated long-term value creation. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc.

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 19,000 restaurants under six brands across over 2,700 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. The Pizza Hut brand in Mainland China is owned by Yum China. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit https://ir.yumchina.com/.

Contacts

Investor Relations Contact:
Tel: +86 21 2407 7556
[email protected] 

Media Contact:
Tel: +86 21 2407 3824
[email protected]

SOURCE Yum China Holdings, Inc.

Investors interested in Retail - Restaurants stocks are likely familiar with Yum China Holdings (YUMC) and Chipotle Mexican Grill (CMG). But which of these two companies is the best option for those looking for undervalued stocks?

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Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

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Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on April 1, 2016, became an independent and publicly traded company after its spin-off from Yum! Brands, Inc. on Oct. 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.

YUMC is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 13.88; value investors should take notice.

One analyst revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.00 to $2.95 per share. YUMC also boasts an average earnings surprise of +3.9%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Yum China (YUMC - Free Report) . YUMC is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 16 right now. For comparison, its industry sports an average P/E of 20.51. YUMC's Forward P/E has been as high as 21.09 and as low as 14.45, with a median of 17.76, all within the past year.

Finally, our model also underscores that YUMC has a P/CF ratio of 11.87. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 18.81. YUMC's P/CF has been as high as 14.79 and as low as 10.47, with a median of 12.61, all within the past year.

These are just a handful of the figures considered in Yum China's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that YUMC is an impressive value stock right now.

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.

The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.

How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.8% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on April 1, 2016, became an independent and publicly traded company after its spin-off from Yum! Brands, Inc. on Oct. 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.

YUMC is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 14.5; value investors should take notice.

For fiscal 2026, four analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.01 to $2.95 per share. YUMC boasts an average earnings surprise of +3.9%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.

Engineers Gate Manager LP decreased its stake in shares of Yum China (NYSE:YUMC – Free Report) by 32.6% in the 2nd quarter, according to its most recent 13F filing with the SEC. The firm owned 86,637 shares of the company’s stock after selling 41,851 shares during the period. Engineers Gate Manager LP’s holdings in Yum China were worth $3,541,000 as of its most recent filing with the SEC.

A number of other institutional investors and hedge funds have also bought and sold shares of YUMC. Main Street Group LTD acquired a new stake in shares of Yum China during the 1st quarter worth $26,000. Ascentis Independent Advisors bought a new position in shares of Yum China in the 1st quarter valued at $27,000. Elyxium Wealth LLC bought a new stake in shares of Yum China during the 4th quarter valued at approximately $27,000. Mitsubishi UFJ Asset Management Co. Ltd. bought a new position in shares of Yum China in the 2nd quarter valued at $29,000. Finally, MBM Wealth Consultants LLC acquired a new position in shares of Yum China in the first quarter valued at approximately $37,000. Institutional investors and hedge funds own 85.58% of the company’s stock.

Insider Buying and Selling at Yum China In other Yum China news, insider Jeff Kuai sold 14,586 shares of the business’s stock in a transaction on Wednesday, August 12th. The shares were sold at an average price of $47.72, for a total value of $696,043.92. Following the completion of the sale, the insider directly owned 63,541 shares of the company’s stock, valued at $3,032,176.52. The trade was a 18.67% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at the SEC website. Also, insider Duoduo (Howard) Huang sold 24,096 shares of the business’s stock in a transaction dated Tuesday, August 18th. The shares were sold at an average price of $47.08, for a total value of $1,134,439.68. Following the completion of the sale, the insider directly owned 7,589 shares of the company’s stock, valued at approximately $357,290.12. This trade represents a 76.05% decrease in their position. The disclosure for this sale is available in the SEC filing. 0.44% of the stock is currently owned by company insiders.

Wall Street Analyst Weigh In A number of research firms have commented on YUMC. Wall Street Zen upgraded Yum China from a “hold” rating to a “buy” rating in a research report on Monday, August 17th. The Goldman Sachs Group reiterated a “buy” rating and set a $59.00 price target on shares of Yum China in a report on Thursday, July 30th. Finally, Weiss Ratings reiterated a “hold (c)” rating on shares of Yum China in a report on Friday, August 21st. Three investment analysts have rated the stock with a Buy rating and one has given a Hold rating to the company’s stock. According to data from MarketBeat.com, the company presently has a consensus rating of “Moderate Buy” and an average target price of $59.21. Get Our Latest Research Report on Yum China

Yum China Stock Up 0.2% YUMC opened at $42.41 on Monday. Yum China has a twelve month low of $40.15 and a twelve month high of $58.39. The company’s 50-day moving average price is $45.34 and its two-hundred day moving average price is $46.75. The stock has a market cap of $14.52 billion, a price-to-earnings ratio of 15.53, a PEG ratio of 1.11 and a beta of 0.08. The company has a quick ratio of 0.78, a current ratio of 0.96 and a debt-to-equity ratio of 0.01.

Yum China (NYSE:YUMC – Get Free Report) last issued its quarterly earnings results on Thursday, July 30th. The company reported $0.70 EPS for the quarter, beating analysts’ consensus estimates of $0.67 by $0.03. Yum China had a return on equity of 15.82% and a net margin of 7.84%.The firm had revenue of $3.14 billion for the quarter, compared to analysts’ expectations of $3.05 billion. During the same quarter in the prior year, the firm earned $0.58 EPS. The business’s revenue for the quarter was up 12.6% compared to the same quarter last year. As a group, equities analysts expect that Yum China will post 2.95 earnings per share for the current year.

Yum China Dividend Announcement The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, September 17th. Stockholders of record on Thursday, August 27th will be issued a $0.29 dividend. This represents a $1.16 dividend on an annualized basis and a dividend yield of 2.7%. The ex-dividend date is Thursday, August 27th. Yum China’s payout ratio is presently 42.49%.

Yum China Company Profile (Free Report)

Yum China Holdings, Inc (NYSE:YUMC) is a restaurant company that operates and franchises brands across mainland China. It is the exclusive operator of KFC and Pizza Hut in China and also operates Taco Bell restaurants in the market.

The company’s broader portfolio includes Chinese restaurant concepts such as Huang Ji Huang and Little Sheep, as well as coffee and beverage brands including Lavasa and COFFii & JOY. Its restaurants offer a range of quick-service meals, casual dining options, beverages and related food products through dine-in, takeaway, delivery and digital ordering channels.

Yum China became an independent, publicly traded company in 2016 following its separation from Yum! Brands.

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BlackRock Inc. purchased a new position in shares of Yum China (NYSE:YUMC – Free Report) during the second quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission (SEC). The fund purchased 442,625 shares of the company’s stock, valued at approximately $18,090,000. BlackRock Inc. owned about 0.13% of Yum China as of its most recent SEC filing.

Other institutional investors and hedge funds have also recently bought and sold shares of the company. Ashoka WhiteOak Capital Pte Ltd boosted its position in Yum China by 0.7% during the fourth quarter. Ashoka WhiteOak Capital Pte Ltd now owns 28,350 shares of the company’s stock worth $1,342,000 after purchasing an additional 200 shares during the period. Glenview Trust Co raised its position in shares of Yum China by 4.3% in the fourth quarter. Glenview Trust Co now owns 4,904 shares of the company’s stock valued at $234,000 after purchasing an additional 200 shares during the period. Truist Financial Corp lifted its stake in shares of Yum China by 0.3% during the 4th quarter. Truist Financial Corp now owns 68,009 shares of the company’s stock worth $3,247,000 after buying an additional 211 shares during the last quarter. Biltmore Family Office LLC boosted its holdings in shares of Yum China by 3.1% during the 4th quarter. Biltmore Family Office LLC now owns 7,111 shares of the company’s stock worth $339,000 after buying an additional 216 shares during the period. Finally, Williams Jones Wealth Management LLC. boosted its holdings in shares of Yum China by 2.7% during the 4th quarter. Williams Jones Wealth Management LLC. now owns 8,258 shares of the company’s stock worth $394,000 after buying an additional 221 shares during the period. Institutional investors own 85.58% of the company’s stock.

Yum China Stock Performance NYSE:YUMC opened at $43.71 on Friday. Yum China has a twelve month low of $40.15 and a twelve month high of $58.39. The company has a quick ratio of 0.78, a current ratio of 0.96 and a debt-to-equity ratio of 0.01. The stock’s 50-day simple moving average is $45.13 and its 200 day simple moving average is $47.25. The firm has a market capitalization of $14.97 billion, a PE ratio of 16.01, a price-to-earnings-growth ratio of 1.18 and a beta of 0.08.

Yum China (NYSE:YUMC – Get Free Report) last issued its earnings results on Thursday, July 30th. The company reported $0.70 EPS for the quarter, topping the consensus estimate of $0.67 by $0.03. The firm had revenue of $3.14 billion during the quarter, compared to the consensus estimate of $3.05 billion. Yum China had a return on equity of 15.82% and a net margin of 7.84%.The business’s quarterly revenue was up 12.6% on a year-over-year basis. During the same quarter in the previous year, the firm earned $0.58 earnings per share. On average, analysts anticipate that Yum China will post 2.95 EPS for the current fiscal year. Yum China Dividend Announcement The company also recently declared a quarterly dividend, which will be paid on Thursday, September 17th. Stockholders of record on Thursday, August 27th will be paid a dividend of $0.29 per share. This represents a $1.16 dividend on an annualized basis and a dividend yield of 2.7%. The ex-dividend date of this dividend is Thursday, August 27th. Yum China’s dividend payout ratio (DPR) is presently 42.49%.

Insiders Place Their Bets In other news, insider Duoduo (Howard) Huang sold 24,096 shares of the company’s stock in a transaction on Tuesday, August 18th. The shares were sold at an average price of $47.08, for a total value of $1,134,439.68. Following the sale, the insider directly owned 7,589 shares of the company’s stock, valued at approximately $357,290.12. This represents a 76.05% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through the SEC website. Also, insider Jeff Kuai sold 14,586 shares of the stock in a transaction dated Wednesday, August 12th. The stock was sold at an average price of $47.72, for a total value of $696,043.92. Following the sale, the insider owned 63,541 shares of the company’s stock, valued at approximately $3,032,176.52. The trade was a 18.67% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 0.44% of the stock is currently owned by insiders.

Wall Street Analysts Forecast Growth YUMC has been the topic of several research analyst reports. The Goldman Sachs Group reissued a “buy” rating and issued a $59.00 price target on shares of Yum China in a report on Thursday, July 30th. Weiss Ratings reaffirmed a “hold (c)” rating on shares of Yum China in a report on Friday, August 21st. Finally, Wall Street Zen upgraded shares of Yum China from a “hold” rating to a “buy” rating in a research note on Monday, August 17th. Three equities research analysts have rated the stock with a Buy rating and one has assigned a Hold rating to the company. According to data from MarketBeat.com, Yum China presently has an average rating of “Moderate Buy” and a consensus price target of $59.21.

Read Our Latest Analysis on Yum China

Yum China Profile (Free Report)

Yum China Holdings, Inc operates as the largest quick-service restaurant company in China, through its ownership and franchising of brands such as KFC, Pizza Hut and Taco Bell. The company’s core business encompasses full-service and fast‐casual dining, takeout and delivery channels, as well as ancillary services including loyalty programs and digital ordering platforms. Yum China’s restaurants offer a diverse menu that adapts global brand concepts to local consumer preferences, featuring items such as soy‐marinated chicken, customized pizzas and region‐inspired side dishes.

In addition to its signature brands, Yum China has expanded its portfolio to include innovative concepts tailored to evolving market trends, such as plant‐based offerings, self‐service kiosks and mobile app integrations.

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Yum China (YUMC - Free Report) is a stock many investors are watching right now. YUMC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 16, while its industry has an average P/E of 22.46. Over the last 12 months, YUMC's Forward P/E has been as high as 21.09 and as low as 14.45, with a median of 17.76.

Finally, our model also underscores that YUMC has a P/CF ratio of 11.87. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 20.41. Within the past 12 months, YUMC's P/CF has been as high as 14.79 and as low as 10.47, with a median of 12.61.

These are only a few of the key metrics included in Yum China's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, YUMC looks like an impressive value stock at the moment.

Yum China Holdings (YUMC - Free Report) closed the last trading session at $47.18, gaining 2.9% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $59.27 indicates a 25.6% upside potential.

The mean estimate comprises 12 short-term price targets with a standard deviation of $4.35. While the lowest estimate of $52.00 indicates a 10.2% increase from the current price level, the most optimistic analyst expects the stock to surge 43.3% to reach $67.60. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.

While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.

But, for YUMC, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.

Price, Consensus and EPS Surprise

Here's What You May Not Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.

While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?

They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.

However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.

That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.

Here's Why There Could be Plenty of Upside Left in YUMCAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason to expect an upside in the stock. That's because empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For the current year, four estimates have moved higher over the last 30 days compared to no negative revision. As a result, the Zacks Consensus Estimate has increased 0.5%.

Moreover, YUMC currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Therefore, while the consensus price target may not be a reliable indicator of how much YUMC could gain, the direction of price movement it implies does appear to be a good guide.

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

Zacks Premium also includes the Zacks Style Scores.

What are the Zacks Style Scores? The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.

How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on Apr 1, 2016, became an independent and publicly-traded company; post its spin-off from Yum! Brands, Inc. on Oct 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.

YUMC is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 15.87; value investors should take notice.

Four analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.00 to $2.95 per share. YUMC also boasts an average earnings surprise of +3.9%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, YUMC should be on investors' short list.

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Sale of Pizza Hut, excluding Mainland China, to LongRange Capital remains on track to close this month

LOUISVILLE, Ky.--(BUSINESS WIRE)--Yum! Brands, Inc. (NYSE: YUM) (“Yum!” or the “Company”) today announced the completion of the sale of Pizza Hut in Mainland China (“Pizza Hut China”) to Yum China Holdings, Inc. (NYSE: YUMC; HKEX: 9987) (“Yum China”), for $1.2 billion.

The transaction with Yum China represents one of two previously announced definitive agreements to sell Pizza Hut for $2.7 billion in the aggregate, subject to certain purchase price adjustments relating to the sale of the Pizza Hut business outside of Mainland China.

Yum!’s transaction to sell Pizza Hut, excluding Mainland China, to LongRange Capital remains on track to close this month, subject to customary closing conditions, including receipt of required regulatory approvals.

About Yum! Brands

Yum! Brands, Inc. and its subsidiaries franchise or operate more than 58,000 restaurants in 155 countries and territories under its iconic brands — KFC, Taco Bell, Pizza Hut and Habit Burger & Grill. KFC, Taco Bell and Pizza Hut are global leaders in the chicken, Mexican-inspired food and pizza categories, respectively. Habit is a fast-casual concept known for fresh, cooked-to-order food.

Fueled by Yum!’s Recipe for Good Growth, KFC, Taco Bell and Pizza Hut led Entrepreneur's 2026 Franchise 500 rankings and its Top Global Franchises 2025 list. In 2026, Yum!’s unrivaled culture and talent led it to be named one of TIME magazine’s list of Best Companies for Future Leaders for the third consecutive year.

Forward-Looking Statements

This announcement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding the anticipated consummation of the sale of the Pizza Hut business outside Mainland China. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on and reflect our current expectations, estimates, assumptions and/ or projections, our perception of historical trends and current conditions, as well as other factors that we believe are appropriate and reasonable under the circumstances. Forward-looking statements are neither predictions nor guarantees of future events, circumstances or performance and are inherently subject to known and unknown risks, uncertainties and assumptions that could cause our actual results to differ materially from those indicated by those statements. There can be no assurance that our expectations, estimates, assumptions and/or projections, including with respect to the future earnings and performance or capital structure of Yum! Brands, will prove to be correct or that any of our expectations, estimates or projections will be achieved.

Numerous factors could cause our actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: food safety and food- or beverage-borne illness concerns, including the impact of the July 2026 cyclospora outbreak; the impact of such outbreak on sales and pace of recovery; adverse impacts of public health conditions or other catastrophic or unforeseen events; the success and financial stability of our concepts’ franchisees; the success of our development strategy; anticipated benefits from past or potential future acquisitions, investments, other strategic transactions or initiatives, or our portfolio business model; the possibility that the sale of the Pizza Hut business will not close within the anticipated timeframe, or at all, or that we may not be able to realize the anticipated benefits of the sale of the Pizza Hut business; our significant exposure to the Chinese market; our global operations and related exposure to geopolitical instability, including the expansion or threatened expansion of restrictive trade policies and increasing anti-American sentiment; foreign currency risks and foreign exchange controls; our ability to protect the integrity or availability of IT systems or the security of confidential information and other cybersecurity risks; compliance with data privacy, data protection and emerging technology legal requirements; our ability to successfully and securely implement technology initiatives, including utilization of artificial intelligence; our increasing dependence on digital commerce and delivery platforms; the impact of social media; our ability to protect our trademarks or other intellectual property; shortages or interruptions in the availability and the delivery of food, equipment and other supplies; the loss of key personnel or failure to successfully transition senior management, labor shortages and increased labor costs, including as a result of state and local legislation related to wages and working conditions; changes in food prices and other operating costs; our corporate reputation, the value and perception of our brands and changes in consumer preferences such as wellness trends; evolving expectations and requirements with respect to social and environmental sustainability matters; adverse effects of severe weather and climate change; pending or future litigation and legal claims or proceedings; changes in, or non-compliance with, legal requirements; tax matters, including changes in tax rates or laws, impositions of new taxes, tax implications of our restructurings, or disagreements with taxing authorities; changes in consumer discretionary spending and macroeconomic conditions, including inflationary pressures and interest rate conditions; competition within the retail food industry; and risks relating to our level of indebtedness. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The forward-looking statements included in this announcement are only made as of the date of this announcement and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances.

You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Forward-Looking Statements” in our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q) for additional detail about factors that could affect our financial and other results.

More News From Yum! Brands, Inc.

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Key Takeaways YUM expects about $2.3 billion in net proceeds for debt repayment and potential share repurchases.Pizza Hut's sales and profit declines weighed on YUM, while transition services add execution risk.KFC posted 7% unit growth, while Taco Bell delivered 7% same-store sales and 19% profit growth. Yum! Brands, Inc. (YUM - Free Report) is preparing to exit Pizza Hut through transactions valued at $2.7 billion. The move could simplify the portfolio, release capital and place greater emphasis on KFC, Taco Bell and Habit Burger & Grill.

The strategic logic is clear, but the investment case still depends on closing the deals smoothly, reducing near-term borrowing pressure and proving that the remaining brands can support higher-quality growth.

YUM’s Pizza Hut Exit Sharpens Its Brand PortfolioLongRange Capital is set to acquire Pizza Hut outside Mainland China, while Yum China Holdings, Inc. (YUMC - Free Report) will purchase the Mainland China operations. The transactions are expected to separate a weaker-performing business from YUM’s faster-growing brands.

Pizza Hut’s second-quarter system sales declined 2% excluding foreign currency effects, same-store sales fell 1% and operating profit dropped 14% on the same basis. Removing that drag could make YUM’s operating profile easier to evaluate.

YUM Could Put $2.3 Billion of Proceeds to WorkManagement expects approximately $2.3 billion in net proceeds from the divestiture. Part of the cash is intended for repayment of revolver borrowings, while most of the remainder is expected to be reserved for share repurchases, subject to market conditions.

That plan gives YUM two potential uses of capital. Debt repayment could improve near-term flexibility, while repurchases could reduce the share count if completed at attractive prices.

Debt Reduction Could Strengthen YUM’s FlexibilityShort-term borrowings increased to $2.81 billion at June 30, 2026, from $38 million at the end of 2025. Total borrowings also rose to about $12.28 billion from $11.91 billion over that period.

Applying transaction proceeds to the revolver would reduce the concentration of near-term obligations. It could also give management more room to balance shareholder returns with investment in restaurant development, digital capabilities and brand support.

YUM Still Faces a Complicated Separation ProcessThe transaction does not remove Pizza Hut from YUM immediately. The company expects to provide enterprise technology and finance services after closing, with most transition services phased out during 2027.

Those arrangements create execution risk. Delays, added separation costs or weaker operating leverage after the services end could reduce the expected benefits of the portfolio change.

KFC and Taco Bell Must Lead YUM’s Next ChapterKFC delivered 7% unit growth and opened 660 gross new restaurants across 55 markets in the second quarter. Taco Bell generated 7% same-store sales growth and 19% operating profit growth, making both brands central to YUM’s post-separation outlook.

Domino’s Pizza, Inc. (DPZ - Free Report) offers a useful industry comparison because its largely franchised model also relies on brand strength, digital ordering and restaurant-level execution. For YUM, sustained comparable sales, franchisee economics and digital engagement will determine whether a streamlined portfolio produces better earnings quality.

YUM’s Scores Suggest Waiting for Deal ProgressThe Pizza Hut exit could improve YUM’s focus and capital allocation, but the benefits remain partly dependent on transaction completion and post-close execution. That balance supports monitoring deal progress rather than treating the announced sale as a fully realized catalyst.

The stock currently carries a Zacks Rank #3 (Hold). Its Growth Score of C is accompanied by a Value Score of D, Momentum Score of F and VGM Score of D. The Hold rank supports a measured stance, while the weaker Value, Momentum and combined VGM readings indicate that the stock does not currently offer a broadly favorable style profile.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wuthering Waves, the role-playing game, and Pizza Hut held a joint activity in Shanghai last year. (Photo credit should read CFOTO/Future Publishing via Getty Images)

CFOTO/Future Publishing via Getty Images

Yum China Holdings, one of the largest restaurant companies in mainland China and the operator of big KFC and Pizza Hut chains in the country, climbed 3.2% to close a near three- and-a-half-month high at the Hong Kong Stock Exchange today after it posted an increase in second quarter earnings and expressed optimism about the rest of the year.

Yum China’s stock has gained 5.2% in the past two sessions in Hong Kong since it posted a second-quarter earnings report on Thursday evening. Yum China’s New York-traded shares climbed by 3.7% to $48.18 on Friday, a near three-month high.

Total revenue in the second quarter increased by 13% from a year earlier to $3.1 billion, helped by the opening of a net 560 new stores. Net income increased 14% to $244 million -- the same percentage as the reported increase in operating profit. Spun off from Yum! Brands in 2016, Yum China had more than 19,000 stores as of June 30, including 18% run by franchisees.

Business in the second quarter notably improved at Pizza Hut, which is in focus ahead of the Yum China’s expected purchase of the brand in mainland China in August. “We are about to reach a major breakthrough by becoming the owner of the Pizza Hut brand in mainland China, after operating the brand in the market for 36 years,” CEO Joey Wat said in a statement.

“In the near term, we expect the savings in license fees to support margin expansion, with Pizza Hut's restaurant margin approaching KFC's. More potential new stores are expected to meet our payback requirements of two to three years. Over the longer term, brand ownership will give us greater strategic flexibility to capture new opportunities and innovate more nimbly across our menu, store formats, new business modules and operations. We expect this to accelerate Pizza Hut’s growth trajectory and generate sustainable long-term value for our shareholders,” said Wat, who ranked No. 68 on the 2025 Forbes Power Women list.

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An 26% increase in delivery sales in the second quarter suggests Pizza Hut is competing better with rival Domino’s, said Shaun Rein, the founder and managing director of Shanghai-headquartered China Market Research Group and author of books including “The Split: Finding Opportunities in China’s Economy in the New World Older.”

“Pizza Hut has long been strong in dining but historically has been weaker compared to Domino’s at delivery. But new moves to reduce delivery times have made it strong in delivery and take back share from Domino’s,” Rein said. “Yum is also doing well with expanding its coffee line. Even though that means the average ticket price has dropped, volume has gone up as consumers look for cheaper coffee than Starbucks,” Rein said.

For the full year, Yum China is targeting a total of more than 20,000 stores, an increase of more than 1,900 from a year earlier, the company said in its earnings report.

Shares have also benefitted from stock buybacks and cash distributions. The company plans to return $1.5 billion to shareholders in 2026, about 10% of its current market capitalization.

Yum China has also attracted customers to KFCs over the years with a strong localized menu that includes tea eggs, salted egg yolk rice rolls, sweet pumpkin congee with lotus seeds, and red bean drink with sweet fermented rice.

ForbesTaiwan’s Formosa International Eyes Luxury Hotel Acquisition In U.S.By Russell FlanneryForbesChina Outlook ‘26: “I'm Getting Very Bullish”By Russell FlanneryForbes‘We’re Going To Get Lots Of Booms And Busts’ In AI StocksBy Russell Flannery

It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

Zacks Premium also includes the Zacks Style Scores.

What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.

Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.

Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum ScoreMomentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Yum China Holdings (YUMC - Free Report) Yum China Holdings, Inc., incorporated in Delaware on Apr 1, 2016, became an independent and publicly-traded company; post its spin-off from Yum! Brands, Inc. on Oct 31, 2016. Yum China’s U.S. operations are based in Texas. The company operates both company-owned and franchised restaurants.

YUMC is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

Momentum investors should take note of this Retail-Wholesale stock. YUMC has a Momentum Style Score of B, and shares are up 11.4% over the past four weeks.

For fiscal 2026, three analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.02 to $2.95 per share. YUMC boasts an average earnings surprise of +3.9%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, YUMC should be on investors' short list.

Key Takeaways YUMC trades at 14.55X forward earnings, below industry, sector and its five-year median valuation.Yum China posted Q2 revenue up 13%, adjusted EPS up 21% and a ninth straight margin expansion.YUMC plans 1,900 new stores in 2026 while returning $1.5 billion to shareholders. Yum China Holdings (YUMC - Free Report) offers investors a mixed but potentially attractive setup after its second-quarter 2026 earnings beat, better profitability and continued store expansion.

The question is whether earnings momentum and a lower valuation are enough to offset limited upside to the six-to-12-month $49 price target, delivery-cost pressure and risks tied to consumer demand in China.

YUMC Trades Below Key Valuation BenchmarksYUMC traded at 14.55X forward 12-month earnings, below the restaurant sub-industry at 22.96X, the broader Zacks Retail-Wholesale sector at 22.52X and the S&P 500 at 20.1X.

That discount is notable against the stock’s own history. The current multiple sits below its five-year median of 19.35X but above the five-year low of 12.52X, suggesting the valuation is cheaper than normal without being deeply distressed.

Yum China Delivers Improving EarningsAdjusted earnings per share were 70 cents, up 21% year over year and above the Zacks Consensus Estimate of 69 cents. Revenues rose 13% to $3.14 billion and topped the consensus mark of $3.06 billion.

Operating profit increased 14% to a second-quarter record of $348 million. Operating margin widened 20 basis points to 11.1%, marking the ninth consecutive quarter of expansion.

YUMC Offers Growth Beyond Existing StoresYum China’s investment case also rests on a larger store base. The company plans more than 1,900 net new store openings in 2026 and expects its total count to exceed 20,000 units during the year.

Franchisees are expected to account for 40-50% of net new openings at both KFC and Pizza Hut. That mix can bring local capital and resources into lower-tier cities and remote markets, although franchise locations represented only 18% of total stores at the end of the second quarter.

Yum China Supports Shareholder ReturnsCash generation adds another layer to the investment case. Net cash provided by operating activities reached $976 million in the first half of 2026, up from $864 million in the prior-year period.

Yum China plans to return $1.5 billion to shareholders in 2026. It returned $718 million in the first half and intends to distribute 100% of annual free cash flow after minority dividend payments beginning in 2027.

YUMC Faces Limits to Its Upside CaseThe valuation case is not open-ended. The $49 price target implies only modest upside from the $46.47 share price cited as of July 30, 2026.

Risks remain visible. KFC’s average ticket fell 3% in the second quarter, while Pizza Hut’s declined 11%. Delivery represented about 54% of company sales, lifting rider-cost pressure, while uneven Chinese consumer spending and intense competition continue to limit pricing power.

The planned acquisition of the Pizza Hut brand in Mainland China adds another financial consideration. Yum China expects to fund the deal primarily through a $1.2 billion offshore bridge loan with a term of up to 12 months.

Yum China Shows a Constructive but Mixed SetupYUMC has a constructive near-term profile, but the stock still depends on execution. Earnings growth, margin expansion, lower valuation and capital returns are positives, while the modest price-target gap and delivery economics keep the setup balanced.

The stock currently carries a Zacks Rank #2 (Buy). It also has a VGM Score of A, with a Value Score of B, Growth Score of B and Momentum Score of B. That mix points to favorable near-term investment characteristics across valuation, growth and price trends. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Restaurant peers such as Chipotle Mexican Grill (CMG - Free Report) and Darden Restaurants (DRI - Free Report) offer useful context for investors comparing traffic, pricing and margin execution across the industry. Against that backdrop, Yum China’s longer-term appeal depends on sustaining transactions, protecting margins and keeping earnings estimates supportive.

Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Yum China Holdings (YUMC - Free Report) and Chipotle Mexican Grill (CMG - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Yum China Holdings and Chipotle Mexican Grill are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that YUMC likely has seen a stronger improvement to its earnings outlook than CMG has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

YUMC currently has a forward P/E ratio of 15.61, while CMG has a forward P/E of 30.29. We also note that YUMC has a PEG ratio of 1.28. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CMG currently has a PEG ratio of 2.24.

Another notable valuation metric for YUMC is its P/B ratio of 2.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CMG has a P/B of 18.24.

Based on these metrics and many more, YUMC holds a Value grade of B, while CMG has a Value grade of D.

YUMC sticks out from CMG in both our Zacks Rank and Style Scores models, so value investors will likely feel that YUMC is the better option right now.

For the quarter ended June 2026, Yum China Holdings (YUMC - Free Report) reported revenue of $3.14 billion, up 12.6% over the same period last year. EPS came in at $0.70, compared to $0.58 in the year-ago quarter.

The reported revenue compares to the Zacks Consensus Estimate of $3.06 billion, representing a surprise of +2.65%. The company delivered an EPS surprise of +1.45%, with the consensus EPS estimate being $0.69.

While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.

As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.

Here is how Yum China performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

No of Restaurants - Total: 19,297 versus 19,128 estimated by three analysts on average.No of Restaurants - Others: 959 compared to the 898 average estimate based on three analysts.No of Restaurants - Pizza Hut: 4,549 versus the three-analyst average estimate of 4,494.No of Restaurants - KFC: 13,789 compared to the 13,737 average estimate based on three analysts.Revenues- Franchise fees and income: $29 million compared to the $29.78 million average estimate based on four analysts. The reported number represents a change of +20.8% year over year.Revenues- Company sales: $2.91 billion compared to the $2.86 billion average estimate based on four analysts. The reported number represents a change of +11.4% year over year.Revenues- Revenues from transactions with franchisees: $155 million versus the four-analyst average estimate of $131.87 million. The reported number represents a year-over-year change of +34.8%.Revenues- Other revenues: $44 million versus the four-analyst average estimate of $37.26 million. The reported number represents a year-over-year change of +25.7%.Revenues- KFC- Company sales: $2.29 billion versus the three-analyst average estimate of $2.24 billion. The reported number represents a year-over-year change of +11.4%.Revenues- Pizza Hut: $613 million compared to the $606.39 million average estimate based on three analysts. The reported number represents a change of +10.7% year over year.Revenues- Pizza Hut- Other revenues: $3 million versus the three-analyst average estimate of $6.33 million. The reported number represents a year-over-year change of -50%.Revenues- Pizza Hut- Revenues from transactions with franchisees: $3 million versus $1.86 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +200% change.View all Key Company Metrics for Yum China here>>>

Shares of Yum China have returned +11.9% over the past month versus the Zacks S&P 500 composite's -1.5% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.

Revenue Increased by 13%; Operating Profit Up 14%; Diluted EPS Grew 21%
Same-Store Sales Growth Improved Sequentially to 1%; OP Margin Expanded Year Over Year for the 9th Consecutive Quarter
Acquisition of the Pizza Hut Brand in Mainland China Expected to Close in August 2026
On Track to Return $1.5 Billion to Shareholders in 2026, ~10% of Current Market Capitalization

, /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the second quarter ended June 30, 2026.

Second Quarter Highlights

Total system sales grew 6% year over year ("YoY"), excluding foreign currency translation ("F/X"). Same-store sales grew 1% YoY. Same-store transactions grew 5% YoY, the 14th consecutive quarter of growth. Total revenues increased 13% YoY to $3.1 billion, or a 6% increase excluding F/X. Opened 560 net new stores, a second-quarter record high and 67% higher than the openings in the same quarter last year, with 41% opened by franchisees. As of June 30, 2026, total store count reached 19,297, with 18% of stores operated by franchisees. Operating profit grew 14% YoY to $348 million, a second-quarter record high. Core operating profit grew 7% YoY. OP margin was 11.1%, an increase of 20 basis points YoY, the ninth consecutive quarter of OP margin expansion. Restaurant margin was 16.1%, flat YoY, primarily due to increased rider cost from a higher delivery mix, offset by streamlined operations. Diluted EPS increased 21% YoY to $0.70, or up 14% excluding F/X, and up 10% further excluding the impact(1) of the mark-to-market equity investments. Returned $402 million to shareholders through $301 million in share repurchases and $101 million in cash dividends. Delivery sales grew 26% YoY. Delivery contributed approximately 54% of total Company sales, up from 45% in the same quarter last year. Active Members of KFC or Pizza Hut, defined as those who transacted in the past 12 months, exceeded 270 million, representing a 6% YoY increase. CEO Comments 

Joey Wat, CEO of Yum China, commented, "We delivered strong results in the second quarter. For the ninth consecutive quarter, we simultaneously grew system sales, operating profit and OP margin. While the operating environment remains dynamic, our topline growth continued to outperform the industry in Q2. Same-store sales growth improved sequentially to 1%, led by the 14th consecutive quarter of same-store transaction growth, while store openings continued to accelerate year over year across both company-owned and franchise stores. KFC delivered strong results, with 7% system sales growth and restaurant margin expansion. Pizza Hut's same-store sales returned to positive growth and net new openings nearly doubled from last year."

Wat continued, "Our menu innovations and breakthrough side-by-side modules are helping us broaden into new occasions and new customer segments. As we rapidly roll out KCOFFEE cafe, KPRO and car-side pickup services to more KFC locations, Pizza Hut has also built a Pizza Hut Burger Bar to drive incremental sales and profit. At the same time, our KFC Small Town and Pizza Hut WOW models are helping us deepen penetration in lower-tier cities. With our multiple growth drivers, we are confident in our ability to lead the catering industry and deliver on our full-year growth targets, even as we face tougher comparisons in the second half of the year following last year's delivery platform subsidies."

Wat concluded, "We are about to reach a major breakthrough by becoming the owner of the Pizza Hut brand in Mainland China, after operating the brand in the market for 36 years. In the near term, we expect the savings in license fees to support margin expansion, with Pizza Hut's restaurant margin approaching KFC's. More potential new stores are expected to meet our payback requirements of two to three years. Over the longer term, brand ownership will give us greater strategic flexibility to capture new opportunities and innovate more nimbly across our menu, store formats, new business modules and operations. We expect this to accelerate Pizza Hut's growth trajectory and generate sustainable long-term value for our shareholders."

(1) Refers to a 4 cents favorable F/X impact, and a lower mark-to-market loss of 2 cents in the second quarter of 2026, compared with a loss of 4 cents in the second quarter of 2025.

Key Financial Results

Second Quarter

First Half (Year to Date Ended 6/30)

%/ppts Change

%/ppts Change

2026

2025

Reported

Ex F/X

2026

2025

Reported

Ex F/X

System Sales Growth (2) (%)

6

4

NM

NM

5

3

NM

NM

Same-Store Sales Growth (2) (%)

1

1

NM

NM

1

Even

NM

NM

Operating Profit ($mn)

348

304

+14

+7

795

703

+13

+7

Adjusted Operating Profit (3) ($mn)

348

304

+14

+7

795

703

+13

+7

Core Operating Profit (3) (4) ($mn)

328

304

NM

+7

751

703

NM

+7

OP Margin (5) (%)

11.1

10.9

+0.2

+0.2

12.4

12.2

+0.2

+0.2

Core OP Margin (3) (6) (%)

11.1

10.9

NM

+0.2

12.4

12.2

 NM

+0.2

Net Income ($mn)

244

215

+14

+6

553

507

+9

+3

Adjusted Net Income (3) ($mn)

244

215

+14

+6

553

507

+9

+3

Diluted Earnings
  Per Common Share ($)

0.70

0.58

+21

+14

1.57

1.35

+16

+10

Adjusted Diluted Earnings
  Per Common Share (3) ($)

0.70

0.58

+21

+14

1.57

1.35

+16

+10

(2) System sales and same-store sales percentages exclude the impact of F/X. Effective January 1, 2018, temporary store closures are normalized in the same-store sales calculation by excluding the period during which stores are temporarily closed.

(3) See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details.

(4) Core operating profit is defined as operating profit adjusted for special items, further excluding items affecting comparability and the impact of F/X. The Company uses core operating profit for the purposes of evaluating the performance of its core operations. Current period amounts are derived by translating results at the average exchange rates of the prior year period.

(5) OP margin refers to operating profit as a percentage of total revenues.

(6) Core OP margin refers to core operating profit as a percentage of total revenues excluding F/X.

Note: All comparisons are versus the same period a year ago.

Percentages may not recompute due to rounding.

NM refers to not meaningful.

Capital Returns to Shareholders

The Company is on track to return $1.5 billion each year from 2024 to 2026, which is annually around 10% of our market capitalization as of July 29, 2026. In the first half of 2026, the Company returned $718 million in capital to shareholders through $515 million in share repurchases and $203 million in cash dividends. The Board declared a cash dividend of $0.29 per share on Yum China's common stock, payable on September 17, 2026, to shareholders of record as of the close of business on August 27, 2026. Starting in 2027, the Company plans to return approximately 100% of annual free cash flow after subsidiaries' dividend payments to non-controlling interests. This is anticipated to translate into an average annual return of approximately $900 million to over $1 billion in 2027 and 2028, and to exceed $1 billion in 2028. KFC

Second Quarter

First Half (Year to Date Ended 6/30)

%/ppts Change

%/ppts Change

2026

2025

Reported 

Ex F/X 

2026

2025

Reported 

Ex F/X 

Restaurants

13,789

12,238

+13

NM 

13,789

12,238

+13

NM 

System Sales Growth (%)

7

5

NM 

NM 

6

4

NM 

NM 

Same-Store Sales Growth (%)

1

1

NM 

NM 

1

Even 

NM 

NM 

Total Revenues ($mn)

2,338

2,096

+12

+5

4,791

4,342

+10

+4

Operating Profit ($mn)

332

292

+14

+7

749

678

+10

+5

Core Operating Profit ($mn)

313

292

NM 

+7

709

678

NM 

+5

OP Margin (%)

14.2

14.0

+0.2

+0.2

15.6

15.6

—

—

Restaurant Margin (%)

17.1

16.9

+0.2

+0.2

18.1

18.4

(0.3)

(0.3)

System sales for KFC grew 7% YoY, improving sequentially from 5% in the first quarter. Same-store sales increased 1% YoY, the fifth consecutive quarter of growth. Same-store transactions grew 4% YoY. Ticket average was 3% lower YoY, mainly due to incremental smaller orders from new customer segments and occasions, including KCOFFEE and KPRO. Delivery sales grew 26% YoY, contributing approximately 54% of KFC's Company sales, up from 45% in the same quarter last year. KFC opened 335 net new stores during the quarter, including 152 opened by franchisees, representing 45% of net new store openings. Total store count reached 13,789 as of June 30, 2026, with 17% of stores operated by franchisees. Operating profit increased 14% YoY to $332 million. Core operating profit increased 7% YoY. OP margin was 14.2%, an increase of 20 basis points YoY. Restaurant margin was 17.1%, an increase of 20 basis points YoY, primarily due to streamlined operations and favorable commodity prices, partially offset by the impact of increased rider cost resulting from higher delivery mix and value-for-money offerings. Pizza Hut

Second Quarter

First Half (Year to Date Ended 6/30)

%/ppts Change

%/ppts Change

2026

2025

Reported 

Ex F/X 

2026

2025

Reported

Ex F/X 

Restaurants

4,549

3,864

+18

NM 

4,549

3,864

+18

NM 

System Sales Growth (%)

6

3

NM 

NM 

5

3

NM 

NM 

Same-Store Sales Growth (%)

1

2

NM 

NM 

Even 

1

NM 

NM 

Total Revenues ($mn)

613

554

+11

+4

1,248

1,149

+9

+3

Operating Profit ($mn)

51

46

+11

+5

122

106

+15

+9

Core Operating Profit ($mn)

48

46

NM 

+5

115

106

NM 

+9

OP Margin (%)

8.3

8.3

—

+0.1

9.8

9.2

+0.6

+0.6

Restaurant Margin (%)

12.9

13.3

(0.4)

(0.4)

14.0

13.9

+0.1

+0.1

System sales for Pizza Hut grew 6% YoY, improving sequentially from 4% in the first quarter. Same-store sales growth returned to positive at 1%. Same-store transactions grew 13% YoY, marking the 14th consecutive quarter of growth, and more than offset the 11% decline in ticket average. In line with our mass-market strategy, ticket average moved closer to our target range, primarily driven by value-for-money offerings and incremental smaller orders such as those from solo diners. Delivery sales grew 26% YoY, contributing approximately 52% of Pizza Hut's Company sales, up from 43% in the same quarter last year. Pizza Hut opened 174 net new stores during the quarter, nearly double the net openings in the same quarter last year, including 70 opened by franchisees, representing 40% of net new store openings. Total store count reached 4,549 as of June 30, 2026, with 11% of stores operated by franchisees. Operating profit grew 11% YoY to $51 million. Core operating profit increased 5% YoY. OP margin was 8.3%, flat YoY. OP margin expanded by 60 bps YoY in the first half of the year. Restaurant margin was 12.9%, a decrease of 40 basis points YoY, primarily due to the impact of increased costs associated with higher delivery sales mix, value-for-money offerings and investment in Pizza Hut Burger Bar, partially offset by streamlined operations, automation and favorable commodity prices. Restaurant margin increased by 10 basis points YoY in the first half of the year. 2026 Outlook

The Company targets:

Total stores of over 20,000, or more than 1,900 net new stores. 40-50% franchise mix of net new stores for both KFC and Pizza Hut. Capital expenditures of approximately $600 million to $700 million. $1.5 billion capital return to shareholders. Other Update

The Company is on track to close the acquisition of the Pizza Hut brand in Mainland China in August and plans to secure an approximately $1.2 billion equivalent offshore bridge loan to finance the transaction. Note on Non-GAAP Measures

Reported GAAP results include items that are excluded from non-GAAP measures. See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" and "Segment Results" within this release for non-GAAP reconciliation details.

Conference Call

Yum China's management will hold an earnings conference call at 7:00 a.m. U.S. Eastern Time on Thursday, July 30, 2026 (7:00 p.m. Beijing/Hong Kong Time on Thursday, July 30, 2026).

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/zubr6dix.

To join by phone, please register in advance through the link provided below. Upon registering, you will be provided with participant dial-in numbers and a unique access PIN.

Pre-registration Link: https://register-conf.media-server.com/register/BI611346d62d61456ca32d90b61aca7523

A replay of the webcast will be available two hours after the event and will remain accessible until July 29, 2027. Earnings release and accompanying slides will be available at the Company's Investor Relations website http://ir.yumchina.com.

For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements under the section titled "2026 Outlook." We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investments, store openings, net new stores, franchise mix of net new stores, capital expenditures, capital returns, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, earnings, performance and returns, anticipated effects of population and macroeconomic trends, execution of the Company's RGM 3.0 strategy, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, our ability to control costs and expenses, including tax costs, as well as changes in political, economic, trade relations, regulatory conditions in China and the U.S., and those set forth under the caption "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc.

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 19,000 restaurants under six brands across over 2,700 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com.

Contacts

Investor Relations Contact:

Tel: +86 21 2407 7556

[email protected] 

Media Contact:

Tel: +86 21 2407 3824

[email protected]

Yum China Holdings, Inc.

Condensed Consolidated Statements of Income

(in US$ million, except per share data)

(unaudited)

Quarter Ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Revenues

Company sales

$       2,910

$       2,613

11

$       5,957

$       5,414

10

Franchise fees and income

29

24

18

59

51

15

Revenues from transactions with franchisees

155

115

35

311

236

32

Other revenues

44

35

27

82

67

23

Total revenues

3,138

2,787

13

6,409

5,768

11

Costs and Expenses, Net

Company restaurants

Food and paper

918

810

(13)

1,881

1,684

(12)

Payroll and employee benefits

804

712

(13)

1,617

1,431

(13)

Occupancy and other operating expenses

719

669

(7)

1,437

1,357

(6)

Company restaurant expenses

2,441

2,191

(11)

4,935

4,472

(10)

General and administrative expenses

139

131

(7)

276

269

(3)

Franchise expenses

12

10

(24)

24

21

(18)

Expenses for transactions with franchisees

148

110

(35)

298

227

(31)

Other operating costs and expenses

38

30

(26)

69

59

(18)

Closures and impairment expenses, net

12

12

(7)

12

18

32

Other income, net

—

(1)

 NM 

—

(1)

 NM 

Total costs and expenses, net

2,790

2,483

(12)

5,614

5,065

(11)

Operating Profit

348

304

14

795

703

13

Interest income, net

12

25

(52)

28

51

(48)

Investment loss

(6)

(18)

65

(17)

(15)

(6)

Income Before Income Taxes and
  Equity in Net Earnings (Losses) from
  Equity Method Investments

354

311

14

806

739

9

Income tax provision

(92)

(80)

(14)

(215)

(199)

(8)

Equity in net earnings (losses) from
   equity method investments

2

2

23

4

6

(15)

Net income – including noncontrolling interests

264

233

14

595

546

9

Net income – noncontrolling interests

20

18

(11)

42

39

(7)

Net Income – Yum China Holdings, Inc.

$          244

$          215

14

$          553

$          507

9

Effective tax rate

26.0 %

25.8 %

(0.2)

 ppts. 

26.6 %

26.9 %

0.3

 ppts. 

Basic Earnings Per Common Share

$         0.70

$         0.58

$         1.58

$         1.36

Weighted-average shares outstanding
    (in millions)

348

373

350

374

Diluted Earnings Per Common Share

$         0.70

$         0.58

$         1.57

$         1.35

Weighted-average shares outstanding
    (in millions)

349

374

351

376

OP margin

11.1 %

10.9 %

0.2

ppts.

12.4 %

12.2 %

0.2

ppts.

Company sales

100.0 %

100.0 %

100.0 %

100.0 %

Food and paper

31.5

31.0

(0.5)

 ppts. 

31.6

31.1

(0.5)

ppts.

Payroll and employee benefits

27.6

27.2

(0.4)

 ppts. 

27.1

26.4

(0.7)

ppts.

Occupancy and other operating expenses

24.8

25.7

0.9

 ppts. 

24.1

25.1

1.0

ppts.

Restaurant margin

16.1 %

16.1 %

—

 ppts. 

17.2 %

17.4 %

(0.2)

ppts.

Percentages may not recompute due to rounding. NM refers to not meaningful.

Yum China Holdings, Inc.

KFC Operating Results

(in US$ million)

(unaudited)

Quarter Ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Revenues

Company sales

$        2,294

$        2,059

11

$        4,704

$        4,267

10

Franchise fees and income

24

19

23

47

40

20

Revenues from transactions with franchisees

19

17

18

38

33

16

Other revenues

1

1

(5)

2

2

(4)

Total revenues

2,338

2,096

12

4,791

4,342

10

Costs and Expenses, Net

Company restaurants

Food and paper

710

631

(12)

1,456

1,316

(11)

Payroll and employee benefits

630

556

(13)

1,273

1,110

(15)

Occupancy and other operating expenses

563

523

(8)

1,123

1,055

(6)

Company restaurant expenses

1,903

1,710

(11)

3,852

3,481

(11)

General and administrative expenses

67

61

(9)

128

120

(6)

Franchise expenses

10

9

(22)

21

19

(18)

Expenses for transactions with franchisees

15

15

(3)

30

29

(4)

Other operating costs and expenses

1

1

53

1

2

58

Closures and impairment expenses, net

10

8

(30)

10

13

27

Total costs and expenses, net

2,006

1,804

(11)

4,042

3,664

(10)

Operating Profit

$           332

$           292

14

$           749

$           678

10

OP margin

14.2 %

14.0 %

0.2

ppts.

15.6 %

15.6 %

—

ppts.

Company sales

100.0 %

100.0 %

100.0 %

100.0 %

Food and paper

30.9

30.7

(0.2)

ppts.

31.0

30.9

(0.1)

ppts.

Payroll and employee benefits

27.5

27.0

(0.5)

ppts.

27.1

26.0

(1.1)

ppts.

Occupancy and other operating expenses

24.5

25.4

0.9

ppts.

23.8

24.7

0.9

ppts.

Restaurant margin

17.1 %

16.9 %

0.2

ppts.

18.1 %

18.4 %

(0.3)

ppts.

Percentages may not recompute due to rounding.

Yum China Holdings, Inc.

Pizza Hut Operating Results

(in US$ million)

(unaudited)

Quarter Ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Revenues

Company sales

$           604

$           545

11

$        1,231

$        1,129

9

Franchise fees and income

3

2

47

6

4

41

Revenues from transactions with franchisees

3

1

52

5

3

44

Other revenues

3

6

(41)

6

13

(51)

Total revenues

613

554

11

1,248

1,149

9

Costs and Expenses, Net

Company restaurants

Food and paper

204

177

(15)

417

363

(15)

Payroll and employee benefits

171

154

(11)

339

317

(7)

Occupancy and other operating expenses

151

141

(7)

303

292

(4)

Company restaurant expenses

526

472

(11)

1,059

972

(9)

General and administrative expenses

28

26

(11)

54

52

(6)

Franchise expenses

2

1

(43)

3

2

(37)

Expenses for transactions with franchisees

2

1

(37)

4

3

(25)

Other operating costs and expenses

3

5

41

5

11

53

Closures and impairment expenses, net

1

3

52

1

3

56

Total costs and expenses, net

562

508

(10)

1,126

1,043

(8)

Operating Profit

$             51

$             46

11

$           122

$           106

15

OP margin

8.3 %

8.3 %

—

ppts.

9.8 %

9.2 %

0.6

ppts.

Company sales

100.0 %

100.0 %

100.0 %

100.0 %

Food and paper

33.8

32.5

(1.3)

ppts.

33.9

32.1

(1.8)

ppts.

Payroll and employee benefits

28.3

28.3

—

ppts.

27.5

28.1

0.6

ppts.

Occupancy and other operating expenses

25.0

25.9

0.9

ppts.

24.6

25.9

1.3

ppts.

Restaurant margin

12.9 %

13.3 %

(0.4)

ppts.

14.0 %

13.9 %

0.1

ppts.

Percentages may not recompute due to rounding. 

Yum China Holdings, Inc.

Condensed Consolidated Balance Sheets

(in US$ million)

6/30/2026

12/31/2025

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$             485

$             506

Short-term investments

901

878

Accounts receivable, net

115

95

Inventories, net

459

438

Prepaid expenses and other current assets

390

440

Total Current Assets

2,350

2,357

Property, plant and equipment, net

2,623

2,543

Operating lease right-of-use assets

2,114

2,189

Goodwill

2,021

1,963

Intangible assets, net

151

148

Long-term bank deposits and notes

688

678

Equity investments

382

387

Deferred income tax assets

168

156

Other assets

374

362

Total Assets

10,871

10,783

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Current Liabilities

Accounts payable and other current liabilities

2,263

2,127

Short-term borrowings

66

30

Income taxes payable

107

89

Total Current Liabilities

2,436

2,246

Non-current operating lease liabilities

1,747

1,823

Non-current finance lease liabilities

50

51

Deferred income tax liabilities

418

406

Other liabilities

159

158

Total Liabilities

4,810

4,684

Redeemable Noncontrolling Interest

—

—

Equity

Common stock, $0.01 par value; 1,000 million shares authorized; 345 million shares
      and 355 million shares issued at June 30, 2026 and December 31, 2025, respectively;
      345 million shares and 354 million shares outstanding at June 30, 2026 and December 31,
      2025, respectively.

3

4

Treasury stock

(13)

(28)

Additional paid-in capital

3,696

3,796

Retained earnings

1,696

1,764

Accumulated other comprehensive loss

(25)

(157)

Total Yum China Holdings, Inc. Stockholders' Equity

5,357

5,379

Noncontrolling interests

704

720

Total Equity

6,061

6,099

Total Liabilities, Redeemable Noncontrolling Interest and Equity

$        10,871

$         10,783

Yum China Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(in US$ million)

(unaudited)

Year to Date Ended

6/30/2026

6/30/2025

Cash Flows – Operating Activities

Net income – including noncontrolling interests

$                    595

$                    546

Depreciation and amortization

237

219

Non-cash operating lease cost

211

199

Closures and impairment expenses

12

18

Investment loss

17

15

Equity in net (earnings) losses from equity method investments

(4)

(6)

Distributions of income received from equity method investments

8

9

Deferred income taxes

(9)

(3)

Share-based compensation expense

23

22

Changes in accounts receivable

(17)

(13)

Changes in inventories

(8)

52

Changes in prepaid expenses, other current assets and value-added tax assets

72

(8)

Changes in accounts payable and other current liabilities

39

(53)

Changes in income taxes payable

15

24

Changes in non-current operating lease liabilities

(187)

(200)

Other, net

(28)

43

Net Cash Provided by Operating Activities

976

864

Cash Flows – Investing Activities

Capital spending

(271)

(259)

Purchases of short-term investments, long-term bank deposits and notes

(3,777)

(3,924)

Maturities of short-term investments, long-term bank deposits and notes

3,781

3,905

Acquisition of equity investment

—

(14)

Other, net

2

2

Net Cash Used in Investing Activities

(265)

(290)

Cash Flows – Financing Activities

Proceeds from short-term borrowings

65

—

Repayment of short-term borrowings

(30)

(129)

Repurchase of shares of common stock

(530)

(368)

Cash dividends paid on common stock

(203)

(180)

Dividends paid to noncontrolling interests

(32)

(25)

Other, net

(9)

(7)

Net Cash Used in Financing Activities

(739)

(709)

Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash

7

4

Net Decrease in Cash, Cash Equivalents and Restricted Cash

(21)

(131)

Cash, Cash Equivalents, and Restricted Cash - Beginning of Period

506

723

Cash, Cash Equivalents, and Restricted Cash - End of Period

$                    485

$                    592

In this press release:

Certain performance metrics and non-GAAP measures are presented excluding the impact of foreign currency translation ("F/X"). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations. System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants that operate our restaurant concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise restaurants typically generate ongoing franchise fees for the Company at an average rate of approximately 6% of system sales. Franchise restaurant sales are not included in Company sales in the Condensed Consolidated Statements of Income; however, the franchise fees are included in the Company's revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth. Effective January 1, 2018, the Company revised its definition of same-store sales growth to represent the estimated percentage change in sales of food of all restaurants in the Company system that have been open prior to the first day of our prior fiscal year, excluding the period during which stores are temporarily closed. We refer to these as our "base" stores. Previously, same-store sales growth represented the estimated percentage change in sales of all restaurants in the Company system that have been open for one year or more, including stores temporarily closed, and the base stores changed on a rolling basis from month to month. This revision was made to align with how management measures performance internally and focuses on trends of a more stable base of stores. Unit Count by Brand

KFC

12/31/2025

New Builds

Closures

Refranchised

6/30/2026

Company-owned

11,032

657

(181)

(8)

11,500

Franchisees

1,965

338

(22)

8

2,289

Total

12,997

995

(203)

—

13,789

Pizza Hut

12/31/2025

New Builds

Closures

6/30/2026

Company-owned

3,830

315

(109)

4,036

Franchisees

338

180

(5)

513

Total

4,168

495

(114)

4,549

Others

12/31/2025

New Builds

Closures

6/30/2026

Company-owned

198

61

(19)

240

Franchisees

738

95

(114)

719

Total

936

156

(133)

959

Reconciliation of Reported GAAP Results to Non-GAAP Measures
(in millions, except per share data)
(unaudited)

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides the following non-GAAP measures:

Measures adjusted for Special Items, which include Adjusted Operating Profit, Adjusted Net Income, Adjusted Earnings Per Common Share ("EPS"), Adjusted Effective Tax Rate and Adjusted EBITDA; Company Restaurant Profit ("Restaurant profit") and Restaurant margin; Core Operating Profit and Core OP margin, which exclude Special Items, and further adjusted for Items Affecting Comparability and the impact of F/X; These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our core operations.

With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results.

Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for equity in net earnings (losses) from equity method investments, income tax, interest income, net, investment gain or loss, depreciation and amortization, store impairment charges, and Special Items. Store impairment charges included as an adjustment item in Adjusted EBITDA primarily resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants, and additional impairment evaluation whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If these restaurant-level assets were not impaired, depreciation of the assets would have been recorded and included in EBITDA. Therefore, store impairment charges were a non-cash item similar to depreciation and amortization of our long-lived assets of restaurants. The Company believes that investors and analysts may find it useful in measuring operating performance without regard to such non-cash items.

Restaurant Profit is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants.

Core Operating Profit is defined as Operating Profit adjusted for Special Items, and further excluding Items Affecting Comparability and the impact of F/X. We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Items such as charges, gains and accounting changes which are viewed by management as significantly impacting the current period or the comparable period, due to changes in policy or other external factors, or non-cash items pertaining to underlying activities that are different from or unrelated to our core operations, are generally considered "Items Affecting Comparability." Examples of Items Affecting Comparability include, but are not limited to: temporary relief from landlords and government agencies; VAT deductions due to tax policy changes; and amortization of reacquired franchise rights recognized upon acquisitions. We believe presenting Core Operating Profit provides additional information to further enhance comparability of our operating results and we use this measure for purposes of evaluating the performance of our core operations. Core OP margin is defined as Core Operating Profit divided by Total revenues, excluding the impact of F/X.

The following tables set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures. The reconciliation of GAAP Operating Profit to Restaurant Profit and Core Operating Profit by segment is presented in Segment Results within this release.

Quarter Ended

Year to Date Ended

6/30/2026

6/30/2025

6/30/2026

6/30/2025

Reconciliation of Operating Profit to Adjusted Operating Profit

Operating Profit

$               348

$              304

$           795

$           703

Special Items, Operating Profit 

—

—

—

—

Adjusted Operating Profit

$               348

$              304

$           795

$           703

Reconciliation of Net Income to Adjusted Net Income

Net Income – Yum China Holdings, Inc.

$               244

$              215

$           553

$           507

Special Items, Net Income –Yum China Holdings, Inc.

—

—

—

—

Adjusted Net Income – Yum China Holdings, Inc.

$               244

$              215

$           553

$           507

Reconciliation of EPS to Adjusted EPS

Basic Earnings Per Common Share

$              0.70

$             0.58

$          1.58

$          1.36

Special Items, Basic Earnings Per Common Share

—

—

—

—

Adjusted Basic Earnings Per Common Share

$              0.70

$             0.58

$          1.58

$          1.36

Diluted Earnings Per Common Share

$              0.70

$             0.58

$          1.57

$          1.35

Special Items, Diluted Earnings Per Common Share

—

—

—

—

Adjusted Diluted Earnings Per Common Share

$              0.70

$             0.58

$          1.57

$          1.35

Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate

Effective tax rate

26.0 %

25.8 %

26.6 %

26.9 %

Impact on effective tax rate as a result of Special Items

—

—

—

—

Adjusted effective tax rate

26.0 %

25.8 %

26.6 %

26.9 %

Net income, along with the reconciliation to Adjusted EBITDA, is presented below:

Quarter Ended

Year to Date Ended

6/30/2026

6/30/2025

6/30/2026

6/30/2025

Net Income – Yum China Holdings, Inc.

$           244

$           215

$           553

$           507

Net income – noncontrolling interests

20

18

42

39

Equity in net (earnings) losses from equity method investments

(2)

(2)

(4)

(6)

Income tax provision

92

80

215

199

Interest income, net

(12)

(25)

(28)

(51)

Investment loss

6

18

17

15

Operating Profit

348

304

795

703

Special Items, Operating Profit

—

—

—

—

Adjusted Operating Profit

348

304

795

703

Depreciation and amortization

120

110

237

219

Store impairment charges

14

13

18

19

Adjusted EBITDA

$           482

$           427

$        1,050

$           941

Operating Profit, along with the reconciliation to Core Operating Profit, is presented below:

Quarter ended

% Change

Year to Date Ended

% Change

6/30/2026

6/30/2025

B/(W)

6/30/2026

6/30/2025

B/(W)

Operating Profit

$          348

$          304

14

$            795

$          703

13

Special Items, Operating Profit 

—

—

—

—

Adjusted Operating Profit

$          348

$          304

14

$            795

$          703

13

Items Affecting Comparability

—

—

—

—

F/X impact

(20)

—

(44)

—

Core Operating Profit

$          328

$          304

7

$            751

$          703

7

Total revenues

3,138

2,787

13

6,409

5,768

11

F/X impact

(183)

—

(342)

—

Total revenues, excluding the impact of F/X

$       2,955

$       2,787

6

$          6,067

$       5,768

5

Core OP margin

11.1 %

10.9 %

0.2

ppts.

12.4 %

12.2 %

0.2

ppts.

Yum China Holdings, Inc.

Segment Results

(in US$ million)

(unaudited)

Quarter Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        2,294

$           604

$                   12

$                   —

$               —

$        2,910

Franchise fees and income

24

3

2

—

—

29

Revenues from transactions with franchisees(2)

19

3

25

108

—

155

Other revenues

1

3

235

25

(220)

44

Total revenues

$        2,338

$           613

$                 274

$                 133

$            (220)

$        3,138

Company restaurant expenses

1,903

526

12

—

—

2,441

General and administrative expenses

67

28

8

36

—

139

Franchise expenses

10

2

—

—

—

12

Expenses for transactions with franchisees(2)

15

2

23

108

—

148

Other operating costs and expenses

1

3

231

23

(220)

38

Closures and impairment expenses, net

10

1

1

—

—

12

Total costs and expenses, net

2,006

562

275

167

(220)

2,790

Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Quarter Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Less:

Franchise fees and income

24

3

2

—

—

29

Revenues from transactions with franchisees(2)

19

3

25

108

—

155

Other revenues

1

3

235

25

(220)

44

Add:

General and administrative expenses

67

28

8

36

—

139

Franchise expenses

10

2

—

—

—

12

Expenses for transactions with franchisees(2)

15

2

23

108

—

148

Other operating costs and expenses

1

3

231

23

(220)

38

Closures and impairment expenses, net

10

1

1

—

—

12

Restaurant profit

$           391

$             78

$                   —

$                   —

$               —

$           469

Company sales

2,294

604

12

—

—

2,910

Restaurant margin

17.1 %

12.9 %

(2.3) %

N/A

N/A

16.1 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Quarter Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           332

$             51

$                   (1)

$                  (34)

$               —

$           348

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

(19)

(3)

—

2

—

(20)

Core Operating Profit (Loss)

$           313

$             48

$                   (1)

$                  (32)

$               —

$           328

Quarter Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        2,059

$           545

$                     9

$                   —

$               —

$        2,613

Franchise fees and income

19

2

3

—

—

24

Revenues from transactions with franchisees(2)

17

1

17

80

—

115

Other revenues

1

6

172

17

(161)

35

Total revenues

$        2,096

$           554

$                 201

$                   97

$            (161)

$        2,787

Company restaurant expenses

1,710

472

9

—

—

2,191

General and administrative expenses

61

26

8

36

—

131

Franchise expenses

9

1

—

—

—

10

Expenses for transactions with franchisees(2)

15

1

16

78

—

110

Other operating costs and expenses

1

5

168

17

(161)

30

Closures and impairment expenses, net

8

3

1

—

—

12

Other income, net

—

—

—

(1)

—

(1)

Total costs and expenses, net

1,804

508

202

130

(161)

2,483

Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Quarter Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Less:

Franchise fees and income

19

2

3

—

—

24

Revenues from transactions with franchisees(2)

17

1

17

80

—

115

Other revenues

1

6

172

17

(161)

35

Add:

General and administrative expenses

61

26

8

36

—

131

Franchise expenses

9

1

—

—

—

10

Expenses for transactions with franchisees(2)

15

1

16

78

—

110

Other operating costs and expenses

1

5

168

17

(161)

30

Closures and impairment expenses, net

8

3

1

—

—

12

Other income, net

—

—

—

(1)

—

(1)

Restaurant profit

$           349

$             73

$                   —

$                   —

$               —

$           422

Company sales

2,059

545

9

—

—

2,613

Restaurant margin

16.9 %

13.3 %

(11.5) %

N/A

N/A

16.1 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Quarter Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

—

—

—

—

—

—

Core Operating Profit (Loss)

$           292

$             46

$                   (1)

$                  (33)

$               —

$           304

Year to Date Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        4,704

$        1,231

$                   22

$                   —

$               —

$        5,957

Franchise fees and income

47

6

6

—

—

59

Revenues from transactions with franchisees(2)

38

5

51

217

—

311

Other revenues

2

6

483

47

(456)

82

Total revenues

$        4,791

$        1,248

$                 562

$                 264

$            (456)

$        6,409

Company restaurant expenses

3,852

1,059

25

—

(1)

4,935

General and administrative expenses

128

54

14

80

—

276

Franchise expenses

21

3

—

—

—

24

Expenses for transactions with franchisees(2)

30

4

48

216

—

298

Other operating costs and expenses

1

5

474

44

(455)

69

Closures and impairment expenses, net

10

1

1

—

—

12

Total costs and expenses, net

4,042

1,126

562

340

(456)

5,614

Operating Profit (Loss)

$           749

$           122

$               —

$                  (76)

$               —

$           795

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Year to Date Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           749

$           122

$                   —

$                  (76)

$               —

$           795

Less:

Franchise fees and income

47

6

6

—

—

59

Revenues from transactions with franchisees(2)

38

5

51

217

—

311

Other revenues

2

6

483

47

(456)

82

Add:

General and administrative expenses

128

54

14

80

—

276

Franchise expenses

21

3

—

—

—

24

Expenses for transactions with franchisees(2)

30

4

48

216

—

298

Other operating costs and expenses

1

5

474

44

(455)

69

Closures and impairment expenses, net

10

1

1

—

—

12

Restaurant profit (loss)

$           852

$           172

$                   (3)

$                   —

$                 1

$        1,022

Company sales

4,704

1,231

22

—

—

5,957

Restaurant margin

18.1 %

14.0 %

(8.2) %

N/A

N/A

17.2 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Year to Date Ended 6/30/2026

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           749

$           122

$                   —

$                  (76)

$               —

$           795

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           749

$           122

$                   —

$                  (76)

$               —

$           795

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

(40)

(7)

—

3

—

(44)

Core Operating Profit (Loss)

$           709

$           115

$                   —

$                  (73)

$               —

$           751

Year to Date Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

Company sales

$        4,267

$        1,129

$                   18

$                   —

$               —

$        5,414

Franchise fees and income

40

4

7

—

—

51

Revenues from transactions with franchisees(2)

33

3

36

164

—

236

Other revenues

2

13

342

34

(324)

67

Total revenues

$        4,342

$        1,149

$                 403

$                 198

$            (324)

$        5,768

Company restaurant expenses

3,481

972

20

—

(1)

4,472

General and administrative expenses

120

52

16

81

—

269

Franchise expenses

19

2

—

—

—

21

Expenses for transactions with franchisees(2)

29

3

33

162

—

227

Other operating costs and expenses

2

11

335

34

(323)

59

Closures and impairment expenses, net

13

3

2

—

—

18

Other income, net

—

—

—

(1)

—

(1)

Total costs and expenses, net

3,664

1,043

406

276

(324)

5,065

Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows:

Year to Date Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Less:

Franchise fees and income

40

4

7

—

—

51

Revenues from transactions with franchisees(2)

33

3

36

164

—

236

Other revenues

2

13

342

34

(324)

67

Add:

General and administrative expenses

120

52

16

81

—

269

Franchise expenses

19

2

—

—

—

21

Expenses for transactions with franchisees(2)

29

3

33

162

—

227

Other operating costs and expenses

2

11

335

34

(323)

59

Closures and impairment expenses, net

13

3

2

—

—

18

Other income, net

—

—

—

(1)

—

(1)

Restaurant profit (loss)

$           786

$           157

$                   (2)

$                   —

$                 1

$           942

Company sales

4,267

1,129

18

—

—

5,414

Restaurant margin

18.4 %

13.9 %

(16.0) %

N/A

N/A

17.4 %

Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows:

Year to Date Ended 6/30/2025

KFC

Pizza Hut

All Other Segments

Corporate
and
Unallocated(1)

Elimination

Total

GAAP Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Special Items, Operating Profit 

—

—

—

—

—

—

Adjusted Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

Items Affecting Comparability

—

—

—

—

—

—

F/X impact

—

—

—

—

—

—

Core Operating Profit (Loss)

$           678

$           106

$                   (3)

$                  (78)

$               —

$           703

The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Statements of Income. 

(1)    Amounts have not been allocated to any segment for purpose of making operating decision or assessing financial performance as the transactions are deemed corporate revenues and expenses in nature. 

(2)    Primarily includes revenues and associated expenses of transactions with franchisees derived from the Company's central procurement model whereby the Company centrally purchases substantially all food and paper products from suppliers and then sells and delivers to KFC and Pizza Hut restaurants, including franchisees.

SOURCE Yum China Holdings, Inc.

ToplineA cyclospora parasite outbreak possibly tied to lettuce used by Taco Bell and many others appeared to deliver a blow to the chain's customer traffic—significantly more than was originally reported—as the stock of its parent company, Yum! Brands, fell drastically from a five-month-high earlier this month.

A Taco Bell restaurant in Ohio.

Getty Images for Taco Bell

Key FactsTaco Bell's customer visits on July 17 were roughly 31% below the chain's average Friday traffic level for the year to date, according to Placer.ai, which tracks location activity through mobile devices.

The hit was initially reported to be about 19%, but Placer.ai says early coverage underreported the impact to the restaurant.

The broader fast-food category posted only a 1.9% traffic decline that same day, meaning Taco Bell's drop was approximately 16 times worse than its peers, the data shows.

Shares of Yum! Brands, which is also the parent company of KFC, have fallen about 10% since July 10, when news reports first connected the chain to an ongoing outbreak of an “explosive diarrhea parasite,” erasing roughly $4.3 billion in market value.

Over 1,600 cyclosporiasis cases have been attributed by the Centers for Disease Control and Prevention to Taco Bell restaurants in five states—Indiana, Kentucky, Michigan, Ohio and West Virginia.

The stock plummet came days after Yum! Brands hit a five-month high of $167.49 per share on July 7.

WHAT TO WATCH FORYum! Brands is set to release its earnings on July 30.

KEY BACKGROUNDMore than 7,400 people (most of whom live in Michigan) are confirmed or suspected to have been sickened with cyclosporiasis, an illness caused by the cyclospora parasite, in the last two months, and federal investigators scrambled for weeks to discover the source until identifying Taco Bell’s lettuce supplier as the possible origin. The Food and Drug Administration said more than 1,600 of those sickened in the outbreak reported eating at Taco Bell restaurants, and blamed Taylor Farms’ shredded lettuce. Shortly after, however, the agency backtracked and said a test of the brand’s lettuce for the cyclospora parasite had returned a false positive. The agency didn’t completely clear Taylor Farms, and the supply chain evidence remains, but no produce samples have returned a positive test for the parasite to date. Cyclospora outbreaks are notoriously challenging to trace because the parasite is difficult to detect—finding it has been likened to “a needle in a haystack”—and the CDC says it expects cases to rise through the end of August.

SURPRISING FACTYum! Brands, Sweetgreen and major McDonald’s franchisee Arcos Dorados warned investors about cyclosporiasis in recent Securities and Exchange Commission filings. Each company explicitly named the illness as a material business risk and warned fresh, raw leafy greens handled at its restaurants were at risk for the parasite.

further readingForbesHere’s Where The Cyclosporiasis Outbreak Stands After Taylor Farms’ False PositiveBy Mary Whitfill Roeloffs

ForbesTaco Bell Warned Investors About Cyclosporiasis Before The Outbreak—And These Other Chains Did TooBy Mary Whitfill RoeloffsForbesCyclosporiasis Theories Are Spreading Online. Here’s What’s True.By Mary Whitfill Roeloffs

HomeEarnings AnalysisConsumer 

SummaryYum China is rated Hold, with valuation upside limited to ~5% and a fair 13–15x forward earnings multiple.The PHC (Pizza Hut China) acquisition is strategically positive, enabling menu localization, cost synergies, and improved margins by eliminating royalty fees.Macro headwinds in China—weak consumption, layoffs, and cautious consumer sentiment—may constrain SSS growth and pricing power for KFC and PHC brands.YUMC’s valuation premium to domestic peers appears justified, but further upside is capped without new catalysts amid ongoing macro uncertainty. Wirestock/iStock Editorial via Getty Images

We are previewing YUM China’s (YUMC) upcoming Q2 results, which are scheduled for July 30th. Heading into the print, the consensus is largely bullish with a BUY rating and average target price of $61/share.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.

In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.

However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Our proprietary system currently recommends Yum China Holdings (YUMC - Free Report) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.

While there are numerous reasons why the stock of this restaurant operator in China is a great growth pick right now, we have highlighted three of the most important factors below:

Earnings GrowthEarnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for Yum China is 21.9%, investors should actually focus on the projected growth. The company's EPS is expected to grow 17.1% this year, crushing the industry average, which calls for EPS growth of 5.7%.

Impressive Asset Utilization RatioAsset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.

Right now, Yum China has an S/TA ratio of 1.11, which means that the company gets $1.11 in sales for each dollar in assets. Comparing this to the industry average of 1.04, it can be said that the company is more efficient.

In addition to efficiency in generating sales, sales growth plays an important role. And Yum China looks attractive from a sales growth perspective as well. The company's sales are expected to grow 9.4% this year versus the industry average of 2.6%.

Promising Earnings Estimate RevisionsSuperiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

There have been upward revisions in current-year earnings estimates for Yum China. The Zacks Consensus Estimate for the current year has surged 0.1% over the past month.

Bottom LineYum China has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination indicates that Yum China is a potential outperformer and a solid choice for growth investors.

, /PRNewswire/ -- Yum China Holdings, Inc. (NYSE: YUMC and HKEX: 9987, "Yum China" or the "Company") today announced that it will report its unaudited financial results for the second quarter ended June 30, 2026 before the U.S. market opens on Thursday, July 30, 2026 (after the trading hours of the Hong Kong Stock Exchange on Thursday, July 30, 2026).

Yum China's management will hold an earnings conference call at 7:00 a.m. U.S. Eastern Time on Thursday, July 30, 2026 (7:00 p.m. Beijing/Hong Kong Time on Thursday, July 30, 2026).

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/zubr6dix.

To join by phone, please register in advance through the link provided below. Upon registering, you will be provided with participant dial-in numbers and a unique access PIN.

Pre-registration Link: https://register-conf.media-server.com/register/BI611346d62d61456ca32d90b61aca7523

A replay of the webcast will be available two hours after the event and will remain accessible until July 29, 2027. Earnings release and accompanying slides will be available at the Company's Investor Relations website http://ir.yumchina.com.  

About Yum China Holdings, Inc. 

Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 18,000 restaurants under six brands across over 2,600 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has also partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com.

Investor Relations Contact
Tel: +86 21 2407 7556
E-mail: [email protected] 

Media Contact
Tel: +86 21 2407 3824
E-mail: [email protected] 

SOURCE Yum China Holdings, Inc.

Foreign consumer companies aren't leaving China. They're giving up more control to local operators who can move faster and read the market better.

Key Takeaways YUM will sell Pizza Hut China and ex-China operations in deals worth about $2.7B total.YUM expects roughly $2.3B in net proceeds and authorized a new $4B share repurchase program.Yum! Brands will maintain technology and strategic partnerships tied to the Pizza Hut business. Yum! Brands, Inc. (YUM - Free Report) has agreed to sell Pizza Hut in transactions valued at approximately $2.7 billion, concluding a strategic review of the business that began in November 2025.

Under the agreements, Yum China Holdings, Inc. (YUMC - Free Report) will acquire Pizza Hut China for roughly $1.2 billion, while private equity firm LongRange Capital will purchase Pizza Hut operations outside Mainland China for approximately $1.5 billion. The transaction also includes a potential earn-out payment of up to $75 million for Yum! Brands by 2030.

The deal marks one of the most significant portfolio changes in Yum! Brands' history and highlights management's efforts to sharpen its strategic focus while enhancing long-term shareholder value.

Why YUM Chose to Sell Pizza HutFollowing a comprehensive review of strategic alternatives, Yum! Brands' leadership team and board concluded that selling Pizza Hut represented the most effective path to maximizing shareholder value. The company determined that the brand would be better positioned under ownership structures tailored to the unique characteristics, competitive dynamics and growth opportunities of its respective markets.

The review also occurred against a backdrop of heightened competition across the quick-service restaurant industry and increasingly value-conscious consumer spending patterns. In this environment, YUM concluded that specialized owners with deep restaurant expertise could help Pizza Hut pursue market-specific growth strategies more effectively.

At the same time, the transaction enables Yum! Brands to simplify its portfolio and concentrate resources on growth initiatives, technology investments and operational priorities across its remaining brands. The move is expected to create a more focused organization with greater flexibility to pursue long-term opportunities.

Financial Benefits and Shareholder ReturnsThe transaction is expected to generate approximately $2.3 billion in net proceeds after taxes, transaction fees and closing adjustments. Although YUM anticipates about $85 million in one-time separation-related expenses during the remainder of 2026, the company stands to gain substantial financial flexibility from the deal.

Management intends to deploy the proceeds in accordance with its capital allocation strategy, balancing investments in the business with returns to shareholders. Demonstrating that commitment, the YUM board approved an additional $4 billion share repurchase authorization alongside the transaction announcement.

The expanded buyback program could support earnings-per-share growth over time while providing an attractive mechanism for returning excess capital to investors.

Maintaining Strategic PartnershipsWhile Pizza Hut is changing ownership, Yum! Brands will continue to maintain several important relationships tied to the business. The company will keep providing its proprietary Byte by Yum! technology platform to Pizza Hut Ex-China and will offer transition services to facilitate an orderly separation. Management expects the associated fees to offset corporate expenses previously allocated to Pizza Hut.

Yum! Brands also strengthened its relationship with Yum China through agreements that create incentives linked to future acceleration in KFC China system sales growth. In addition, both companies intend to continue collaborating on Taco Bell's long-term expansion plans in Mainland China.

Upon completion of the transactions, Pizza Hut will no longer be included among YUM’s reportable operating segments, reflecting its transition toward a more streamlined business structure.

YUM's Price Performance, Valuation and EstimatesBeyond the strategic implications of the transaction, investors may also want to examine YUM's stock performance and valuation.

YUM’s shares have gained 14% over the past year, outperforming the restaurant industry's decline of 4.2%. During the same period, the stock also delivered stronger returns than Yum China, McDonald's Corporation (MCD - Free Report) and Domino's Pizza, Inc. (DPZ - Free Report) .

Price Performance
Image Source: Zacks Investment Research

Despite the stock's recent advance, YUM continues to trade at a reasonable valuation relative to the industry. The company currently has a forward 12-month price-to-earnings ratio of 22.27X, below the industry average. In comparison, Yum China, McDonald's and Domino's trade at 13.9X, 21.37X and 16.12X, respectively.

P/E (F12M)
Image Source: Zacks Investment Research

Investor sentiment has also improved in recent months. The Zacks Consensus Estimate for YUM's 2026 and 2027 earnings per share has moved higher over the past 60 days, indicating optimism regarding its earnings outlook.

Image Source: Zacks Investment Research

The Bottom LineThe Pizza Hut divestiture is less about exiting a globally recognized brand and more about repositioning Yum! Brands for its next phase of growth. By placing Pizza Hut under owners focused on its regional opportunities and operational needs, YUM believes the brand can pursue growth more effectively while the parent company concentrates on its highest-priority initiatives.

With approximately $2.3 billion in expected net proceeds, a newly authorized $4 billion share repurchase program and a simplified corporate structure, YUM appears well positioned to strengthen shareholder returns and enhance financial flexibility. If the transactions close as expected in the third quarter of 2026, the deal could represent a meaningful step toward improving the company's long-term growth profile and creating sustainable value for investors.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pizza Hut once dominated American pizza. Now its U.S. business is being sold for $1.7 billion by parent company Yum!