Yum China (NYSE:YUMC) versus Vail Resorts (NYSE:MTN) Critical Review

Vail Resorts (NYSE:MTN) and Yum China (NYSE:YUMC) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Insider and Institutional Ownership

94.9% of Vail Resorts shares are held by institutional investors. Comparatively, 85.6% of Yum China shares are held by institutional investors. 1.2% of Vail Resorts 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 large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Vail Resorts has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Yum China has a beta of 0.07, indicating that its stock price is 93% less volatile than the S&P 500.

Dividends

Vail Resorts pays an annual dividend of $8.88 per share and has a dividend yield of 5.9%. Yum China pays an annual dividend of $1.16 per share and has a dividend yield of 2.6%. Vail Resorts pays out 214.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Yum China pays out 42.5% of its earnings in the form of a dividend. Vail Resorts has increased its dividend for 3 consecutive years and Yum China has increased its dividend for 5 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vail Resorts	5.20%	22.82%	2.61%
Yum China	7.84%	15.82%	8.96%

Analyst Recommendations

This is a summary of current ratings and price targets for Vail Resorts and Yum China, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vail Resorts	3	9	5	0	2.12
Yum China	0	1	3	0	2.75

Vail Resorts presently has a consensus price target of $150.00, indicating a potential downside of 0.91%. Yum China has a consensus price target of $59.21, indicating a potential upside of 31.20%. Given Yum China’s stronger consensus rating and higher probable upside, analysts plainly believe Yum China is more favorable than Vail Resorts.

Earnings & Valuation

This table compares Vail Resorts and Yum China”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vail Resorts	$2.84 billion	1.90	$147.54 million	$4.14	36.56
Yum China	$12.44 billion	1.24	$929.00 million	$2.73	16.53

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

Summary

Vail Resorts beats Yum China on 9 of the 17 factors compared between the two stocks.

About Vail Resorts

Vail Resorts, Inc., through its subsidiaries, operates mountain resorts and regional ski areas in the United States. It operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 41 destination mountain resorts and regional ski areas. This segment is also involved in the ancillary activities, including ski school, dining, and retail/rental operations, as well as real estate brokerage activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand; other lodging properties; various condominiums located in proximity to the company's mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates owned and managed hotel and condominium units. The Real Estate segment owns, develops, and sells real estate properties. The company was founded in 1845 and is based in Broomfield, Colorado.

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.