Comparing Yum China (NYSE:YUMC) and Shake Shack (NYSE:SHAK)

Shake Shack (NYSE:SHAK) and Yum China (NYSE:YUMC) are both retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Shake Shack and Yum China’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shake Shack	3.10%	10.43%	3.04%
Yum China	8.04%	14.13%	8.19%

Analyst Ratings

This is a summary of current ratings and recommmendations for Shake Shack and Yum China, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	3	13	7	1	2.25
Yum China	0	1	0	1	3.00

Shake Shack presently has a consensus price target of $120.52, suggesting a potential upside of 38.35%. Given Shake Shack’s higher probable upside, equities research analysts clearly believe Shake Shack is more favorable than Yum China.

Institutional & Insider Ownership

86.1% of Shake Shack shares are owned by institutional investors. Comparatively, 85.6% of Yum China shares are owned by institutional investors. 8.5% of Shake Shack shares are owned by company insiders. Comparatively, 0.4% of Yum China shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Shake Shack has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, Yum China has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500.

Earnings & Valuation

This table compares Shake Shack and Yum China”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shake Shack	$1.25 billion	2.97	$10.21 million	$1.02	85.41
Yum China	$11.57 billion	1.45	$911.00 million	$2.41	19.24

Yum China has higher revenue and earnings than Shake Shack. Yum China is trading at a lower price-to-earnings ratio than Shake Shack, indicating that it is currently the more affordable of the two stocks.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.

About Yum China

Yum China Holdings, Inc. owns, operates, and franchises restaurants in the People's Republic of China. The company operates through KFC, Pizza Hut, and All Other segments. It operates restaurants under the KFC, Pizza Hut, Taco Bell, Lavazza, Little Sheep, and Huang Ji Huang concepts. The company also operates V-Gold Mall, a mobile e-commerce platform to sell products; and offers online food deliver services. Yum China Holdings, Inc. was founded in 1987 and is headquartered in Shanghai, the People's Republic of China.