Yum China (NYSE:YUMC) shares tanked nearly 12% in the pre-market session today after the China-based restaurant operator’s third-quarter EPS of $0.59 lagged expectations by $0.06. While revenue increased by 9% year-over-year to $2.91 billion, the figure still fell short of estimates by nearly $210 million.
The company is expanding its core menu offerings and utilizing targeted campaigns to drive incremental traffic. During the quarter, system sales grew by 15%, and Yum opened 500 net new stores. It aims to open between 1,400 and 1,600 net new stores for the full year and take its total store count to 20,000 by 2026.
However, YUMC is experiencing softening consumer demand amid broader macroeconomic headwinds. For Fiscal year 2023, YUMC expects capital expenditures to be in the range of $700 million to $900 million.
Moreover, it aims to return nearly $3 billion to investors via dividends and share repurchases from 2024 to 2026. Yum has declared a quarterly dividend of $0.13 per share. The YUMC dividend is payable on December 19 to investors of record on November 28.
What Is the Stock Price Forecast for YUMC?
Overall, the Street has a Strong Buy consensus rating on Yum China. The average YUMC price target of $72.33 implies a substantial 37.6% potential upside.
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