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Why Is Yum China (YUMC) Up 7.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Yum China Holdings (YUMC - Free Report) . Shares have added about 7.7% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Yum China due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Yum China’s Q3 Earnings Met Estimates, Revenues Beat

Yum China reported third-quarter 2025 results with earnings meeting the Zacks Consensus Estimate and revenues beating the same. On a year-over-year basis, the topline increased but the bottom line declined.

YUMC’s Q3 Earnings & Revenue Discussion

Yum China reported adjusted earnings per share of 76 cents meeting the Zacks Consensus Estimate. The bottom line decreased 1.3% year over year.

Total revenues of $2,306 million outpaced the consensus mark of $3,186 million and grew 4% from the year-ago quarter. Excluding foreign currency translation, revenues were also up 4%.

System sales (excluding F/X) increased 4% year over year, driven by a 4% net new unit contribution and 1% same-store sales growth. KFC system sales rose 5%, while Pizza Hut grew 5%. Same-store transactions advanced 4%, marking the 11th consecutive quarter of growth.

Operating Highlights of YUMC

Total costs and expenses came in at $2.81 billion, up 4% from last year. The restaurant margin improved 30 basis points year over year to 17.3%, aided by savings in food, paper and occupancy costs.

Adjusted operating profit grew 8% to $400 million, compared with $371 million in the year-ago quarter. Adjusted EBITDA was $520 million, up from $501 million last year. The adjusted operating margin expanded 40 basis points year over year to 12.5%.

KFC’s revenues rose 4% to $2.4 billion, with operating profit up 6% to $384 million. Pizza Hut’s revenues climbed 3% to $635 million, and operating profit surged 7% to $57 million.

YUMC’s Balance Sheet & Shareholder Returns

As of Sept. 30, 2025, Yum China had cash and cash equivalents of $648 million, down from $723 million at the end of 2024. Total liquidity (cash and short-term investments) stood at $2.14 billion. Long-term bank deposits and notes were $596 million.

The company returned $414 million to its shareholders in the third quarter, comprising $326 million in share repurchases and $88 million in cash dividends. Roughly $610 million remained available under the repurchase authorization.

2025 Outlook of YUMC

For 2025, Yum China continues to expect 1,600-1,800 net new store openings. Management revised its capital expenditure guidance to $600-$700 million (down from $700-$800 million). The company plan to return at $3 billion to its shareholders 2025-2026.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Yum China has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Yum China has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Yum China belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Starbucks (SBUX - Free Report) , has gained 5.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

Starbucks reported revenues of $9.57 billion in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $0.52 for the same period compares with $0.80 a year ago.

For the current quarter, Starbucks is expected to post earnings of $0.60 per share, indicating a change of -13% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.2% over the last 30 days.

Starbucks has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.


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