Financial Comparison: Yum China (NYSE:YUMC) and Portillo’s (NASDAQ:PTLO)

Portillo’s (NASDAQ:PTLO) and Yum China (NYSE:YUMC) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Portillo’s	2.64%	3.93%	1.24%
Yum China	7.87%	14.65%	8.48%

Volatility and Risk

Portillo’s has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500. Comparatively, Yum China has a beta of 0.11, indicating that its stock price is 89% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Portillo’s and Yum China, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Portillo’s	1	9	3	0	2.15
Yum China	0	1	3	0	2.75

Portillo’s currently has a consensus target price of $7.50, indicating a potential upside of 41.78%. Yum China has a consensus target price of $59.05, indicating a potential upside of 21.01%. Given Portillo’s’ higher possible upside, research analysts clearly believe Portillo’s is more favorable than Yum China.

Insider and Institutional Ownership

98.3% of Portillo’s shares are held by institutional investors. Comparatively, 85.6% of Yum China shares are held by institutional investors. 6.1% of Portillo’s shares are held by company insiders. Comparatively, 0.4% of Yum China shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Portillo’s and Yum China”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portillo’s	$732.07 million	0.55	$19.34 million	$0.27	19.59
Yum China	$11.80 billion	1.46	$929.00 million	$2.51	19.44

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

Summary

Yum China beats Portillo’s on 8 of the 13 factors compared between the two stocks.

About Portillo’s

Portillo’s Inc. owns and operates fast casual restaurants in the United States. The company offers Chicago-style hot dogs and sausages, Italian beef sandwiches, char-grilled burgers, chopped salads, crinkle-cut French fries, homemade chocolate cakes, and chocolate cake shake. It offers its products through its website, application, and certain third-party platforms. Portillo’s Inc. was founded in 1963 and is based in Oak Brook, Illinois.

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.