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

Analyst Ratings

This is a summary of recent recommendations for Yum China and Papa Murphy’s, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yum China 0 2 5 0 2.71
Papa Murphy’s 0 0 0 0 N/A

Yum China currently has a consensus price target of $47.65, suggesting a potential upside of 15.77%. Given Yum China’s higher probable upside, equities research analysts plainly believe Yum China is more favorable than Papa Murphy’s.

Volatility and Risk

Yum China has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, Papa Murphy’s has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Yum China 7.55% 20.36% 11.97%
Papa Murphy’s 3.77% 6.50% 2.62%

Earnings & Valuation

This table compares Yum China and Papa Murphy’s’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yum China $8.42 billion 1.85 $708.00 million $1.53 26.90
Papa Murphy’s $126.43 million 0.87 $4.32 million N/A N/A

Yum China has higher revenue and earnings than Papa Murphy’s.

Dividends

Yum China pays an annual dividend of $0.48 per share and has a dividend yield of 1.2%. Papa Murphy’s does not pay a dividend. Yum China pays out 31.4% of its earnings in the form of a dividend.

Institutional and Insider Ownership

80.4% of Yum China shares are owned by institutional investors. Comparatively, 57.7% of Papa Murphy’s shares are owned by institutional investors. 0.4% of Yum China shares are owned by insiders. Comparatively, 13.1% of Papa Murphy’s shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Yum China beats Papa Murphy’s on 12 of the 14 factors compared between the two stocks.

About Yum China

Yum China Holdings, Inc. owns, operates, and franchises restaurants in China. The company operates in two segments, KFC and Pizza Hut. It operates restaurants under the KFC, Pizza Hut, Taco Bell, East Dawning, Little Sheep, and COFFii & JOY brands, which specialize in chicken, pizza, hot pot cooking, Chinese food, Mexican-style food, and coffee categories. The company also provides online food delivery services. As of December 31, 2018, it operated approximately 5,900 KFC restaurants; 2,200 Pizza Hut restaurants; 280 Little Sheep units; 14 East Dawning restaurants; 4 Taco Bell restaurants; and 13 COFFii & JOY units. Yum China Holdings, Inc. was incorporated in 2016 and is headquartered in Shanghai, the People's Republic of China.

About Papa Murphy’s

Papa Murphy's Holdings, Inc., together with its subsidiaries, owns, operates, and franchises Take ‘N' Bake pizza stores. The company operates in three segments: Franchise, Company Stores, and Brand Funds. As of December 31, 2018, it operated approximately 1,437 stores, including 1,294 franchised and 106 company-owned stores in 37 states, as well as 12 stores in Canada and 25 stores in the Middle East. The company was founded in 1981 and is headquartered in Vancouver, Washington.

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