4 Reasons Why You Should Buy Yum China (YUMC) Stock Now
Zacks Investment Research | May 15, 2017 08:07AM ET
On Nov 1, 2016, Yum! Brands, Inc. (NYSE:YUM) announced that it has spun off its all-important China division into an independent, publicly traded company Yum China Holdings, Inc. (NYSE:YUM) .
Post separation, Yum China holds exclusive rights of the KFC, Pizza Hut and Taco Bell brands in China, and also has the provision to add new brands. At the end of Feb, 2017, Yum China had more than 7,600 restaurants in more than 1,100 cities mostly under the KFC and Pizza Hut brands. Taco Bell too opened its first restaurant in China at the end of 2016. Additionally, Yum China owns the Little Sheep and East Dawning concepts outright. The company is expected to be able to triple its unit count in the long term.
Notably, each of the companies – Yum! Brands and Yum China – is expected to return about 15% annually to shareholders through earnings growth and dividends, after the separation. The spin-off has thus certainly led to the establishment of two powerful, independent companies, each well capitalized with long runways for growth and value creation.
Meanwhile, focusing on Yum China, we can say that the stock has been on a hot run ever since its formation, rising 29.9% in comparison to the Zacks categorized Zacks Investment Research
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