1. Is the company undervalued?
EV/EBIT: 23.2
EV/Sales: 1.83
Price/Book: 2.62
Yum China is a strong franchise with attractive unit economics and a long runway for growth. Unfortunately, investors have to pay a premium today in order to participate in that growth. Moreover China’s strict Covid policies will likely be a drag on margins and expansion efforts near term. Nonetheless investors could still achieve satisfactory returns, as the stock isn’t priced for perfection.
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