Yum China (NYSE:YUMC) and Wingstop (NASDAQ:WING) are both retail/wholesale companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.
Institutional and Insider Ownership
82.7% of Yum China shares are held by institutional investors. 0.4% of Yum China shares are held by company insiders. Comparatively, 1.7% of Wingstop shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a summary of recent ratings for Yum China and Wingstop, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Yum China currently has a consensus price target of $42.50, indicating a potential upside of 36.22%. Wingstop has a consensus price target of $63.40, indicating a potential downside of 2.54%. Given Yum China’s higher possible upside, analysts clearly believe Yum China is more favorable than Wingstop.
This table compares Yum China and Wingstop’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Yum China and Wingstop’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Yum China||$7.14 billion||1.67||$403.00 million||$1.42||21.97|
|Wingstop||$105.55 million||18.04||$27.30 million||$0.74||87.91|
Yum China has higher revenue and earnings than Wingstop. Yum China is trading at a lower price-to-earnings ratio than Wingstop, indicating that it is currently the more affordable of the two stocks.
Yum China pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Wingstop pays an annual dividend of $0.36 per share and has a dividend yield of 0.6%. Yum China pays out 28.2% of its earnings in the form of a dividend. Wingstop pays out 48.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Yum China is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk & Volatility
Yum China has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500. Comparatively, Wingstop has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.
Yum China beats Wingstop on 9 of the 16 factors compared between the two stocks.
Yum China Company Profile
Yum China Holdings, Inc. owns, operates, and franchises restaurants in China. The company operates in two segments, KFC and Pizza Hut. It operates restaurants under the KFC, Pizza Hut, Taco Bell, East Dawning, and Little Sheep brands, which specialize in chicken, pizza, hot pot cooking, Chinese food, and Mexican-style food categories. The company also provides online food delivery services. As of December 31, 2017, it operated approximately 5,400 KFC restaurants; 2,100 Pizza Hut restaurants; 280 Little Sheep units; 10 East Dawning restaurants; and 3 Taco Bell restaurants. Yum China Holdings, Inc. was incorporated in 2016 and is headquartered in Shanghai, the People's Republic of China.
Wingstop Company Profile
Wingstop Inc., together with its subsidiaries, franchises and operates restaurants under the Wingstop brand name. Its restaurants offer cooked-to-order, hand-sauced, and tossed chicken wings. As of February 22, 2018, the company operated approximately 1,000 restaurants the United States, Mexico, Singapore, the Philippines, Indonesia, the United Arab Emirates, Malaysia, Saudi Arabia, and Colombia. Wingstop Inc. was founded in 1994 and is headquartered in Dallas, Texas.
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