Insider Selling: Joey Wat Unloads $3.98M Of Yum China Holdings Stock

Making a noteworthy insider sell on March 6, Joey Wat, Chief Executive Officer at Yum China Holdings YUMC, is reported in the latest SEC filing.

What Happened: Wat’s decision to sell 80,197 shares of Yum China Holdings was revealed in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday. The total value of the sale is $3,981,738.

As of Thursday morning, Yum China Holdings shares are down by 0.28%, currently priced at $50.05.

Delving into Yum China Holdings’s Background

With more than 16,000 units and almost USD 12 billion in systemwide sales in 2024, Yum China is the largest restaurant operator in China. It generates revenue through its own restaurants and franchise fees. Key concepts include KFC (11,648 units) and Pizza Hut (3,724), but the company’s portfolio also includes other brands such as Little Sheep, Taco Bell, Huang Ji Huang, and Lavazza (collectively representing more than 1,000 units). Yum China is a trademark licensee of Yum Brands, paying 3% of total systemwide sales to the company it separated from in October 2016.

Unraveling the Financial Story of Yum China Holdings

Revenue Growth: Yum China Holdings’s remarkable performance in 3 months is evident. As of 31 December, 2024, the company achieved an impressive revenue growth rate of 4.09%. This signifies a substantial increase in the company’s top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Analyzing Profitability Metrics:

• Gross Margin: The company faces challenges with a low gross margin of 13.72%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Yum China Holdings’s EPS reflects a decline, falling below the industry average with a current EPS of 0.3.

Debt Management: Yum China Holdings’s debt-to-equity ratio is below industry norms, indicating a sound financial structure with a ratio of 0.42.

Financial Valuation:

• Price to Earnings (P/E) Ratio: The Price to Earnings ratio of 21.64 is lower than the industry average, indicating potential undervaluation for the stock.

• Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 1.74, the stock presents an attractive valuation, potentially signaling a buying opportunity for investors interested in sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio lower than industry averages at 11.64, Yum China Holdings could be considered undervalued.

Market Capitalization Analysis: The company’s market capitalization is above the industry average, indicating that it is relatively larger in size compared to peers. This may suggest a higher level of investor confidence and market recognition.

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Delving Into the Significance of Insider Transactions

While insider transactions provide valuable information, they should be part of a broader analysis in making investment decisions.

Exploring the legal landscape, an “insider” is defined as any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities, as stipulated by Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and major hedge funds. These insiders are required to report their transactions through a Form 4 filing, which must be submitted within two business days of the transaction.

Highlighted by a company insider’s new purchase, there’s a positive anticipation for the stock to rise.

But, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

Transaction Codes To Focus On

Taking a closer look at transactions, investors often prioritize those unfolding in the open market, meticulously cataloged in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C denotes the conversion of an option, and transaction code A signifies a grant, award, or other acquisition of securities from the company.

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

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