Yum China Holdings, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Yum China Holdings, Inc. (NYSE:YUMC) shareholders are probably feeling a little disappointed, since its shares fell 4.3% to US$37.36 in the week after its latest first-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at US$3.0b, statutory earnings beat expectations 9.2%, with Yum China Holdings reporting profits of US$0.71 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Yum China Holdings

Taking into account the latest results, the most recent consensus for Yum China Holdings from 37 analysts is for revenues of US$11.7b in 2024. If met, it would imply a reasonable 6.5% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 2.6% to US$2.17. In the lead-up to this report, the analysts had been modelling revenues of US$11.9b and earnings per share (EPS) of US$2.18 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$54.11, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Yum China Holdings at US$80.00 per share, while the most bearish prices it at US$34.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Yum China Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that Yum China Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 8.8% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Yum China Holdings is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$54.11, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Yum China Holdings going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Yum China Holdings .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.