Yum China Holdings, Inc. (NYSE:YUMC) Annual Results: Here's What Analysts Are Forecasting For This Year

Shareholders of Yum China Holdings, Inc. (NYSE:YUMC) will be pleased this week, given that the stock price is up 12% to US$39.65 following its latest yearly results. Yum China Holdings reported US$11b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.97 beat expectations, being 2.6% higher than what the analysts expected. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts 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 32 analysts is for revenues of US$12.0b in 2024. If met, it would imply a decent 9.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 8.2% to US$2.21. In the lead-up to this report, the analysts had been modelling revenues of US$12.0b and earnings per share (EPS) of US$2.20 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$58.70, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Yum China Holdings analyst has a price target of US$80.00 per share, while the most pessimistic values it at US$33.80. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Yum China Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 9.3% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 5.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.9% 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. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Yum China Holdings going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Yum China Holdings , and understanding this should be part of your investment process.

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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.