Yum stock price forecast remains bullish for 2024

Yum stock price forecast remains bullish for 2024, supported by strong KFC and Taco Bell unit growth in emerging markets. Consensus estimates peg EPS growth at 8%, offering upside for long-term holders. "Yum China Holdings, Inc. (NYSE:YUMC) is the master franchisee for the YUM brands in China and operator of the KFC and Pizza Hut restaurant networks in that market. Shares detracted after the company reported a negative surprise on margins for the third quarter and hinted that increased competition and cost-consciousness among Chinese consumers could cause that margin compression to continue through the first quarter of 2024. Although in-year margins are volatile at Yum China, its pristine balance sheet, cumulative investments in technology, unmatched scale, and successful pivot to higher-ROI, smaller footprint stores in recent years should drive continued 8% to 10% store growth at attractive returns. Further, given its strong free-cash-flow generation and strong balance sheet, we believe the company is likely to offer capital returns to shareholders in excess of earnings over the next several years. We remain shareholders." Leverage remains a central concern, with total debt of $15.97 billion against cash reserves of only $1.03 billion . This equates to a debt-to-equity ratio of 313.69% , among the highest in the restaurant industry. Liquidity metrics are thin, with a current ratio of 1.01 , leaving little cushion against volatility. While levered free cash flow sits at $1.21 billion and operating cash flow at $1.45 billion , interest costs and refinancing risk weigh heavily on the capital structure. Yum stock price forecast sees momentum after debt refinancing at lower interest rates, freeing cash flow for reinvestment or shareholder distributions.