Head to Head Contrast: Habit Restaurants (HABT) vs. Yum China (YUMC)

Habit Restaurants (NASDAQ:HABT) 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 valuation, analyst recommendations, profitability, institutional ownership, risk, dividends and earnings.

Dividends

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

Volatility & Risk

Habit Restaurants has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Yum China has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Habit Restaurants 0.47% 2.72% 1.17%
Yum China 7.55% 20.36% 11.97%

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Habit Restaurants $402.15 million 0.77 $2.78 million $0.17 69.71
Yum China $8.42 billion 1.86 $708.00 million $1.53 26.98

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Habit Restaurants and Yum China, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Habit Restaurants 0 1 3 0 2.75
Yum China 0 2 5 0 2.71

Habit Restaurants currently has a consensus price target of $17.20, suggesting a potential upside of 45.15%. Yum China has a consensus price target of $47.65, suggesting a potential upside of 15.44%. Given Habit Restaurants’ stronger consensus rating and higher probable upside, equities analysts plainly believe Habit Restaurants is more favorable than Yum China.

Insider and Institutional Ownership

65.8% of Habit Restaurants shares are held by institutional investors. Comparatively, 78.2% of Yum China shares are held by institutional investors. 16.0% of Habit Restaurants shares are held by insiders. Comparatively, 0.4% of Yum China shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Yum China beats Habit Restaurants on 10 of the 16 factors compared between the two stocks.

About Habit Restaurants

The Habit Restaurants, Inc., a holding company, operates and franchises fast casual restaurants under The Habit Burger Grill name. It specializes in offering made-to-order char-grilled burgers and sandwiches featuring choice tri-tip steak, grilled chicken, and sushi-grade tuna cooked over an open flame; and salads, as well as sides, shakes, and malts. As of February 28, 2019, the company had 250 restaurants in California, Arizona, Utah, New Jersey, Florida, Idaho, Virginia, Nevada, Washington, Maryland, and Pennsylvania, as well as 4 international locations. The Habit Restaurants, Inc. was founded in 1969 and is headquartered in Irvine, California.

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.

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