For those who appreciate growth without the sticker shock, NASDAQ:PDD is worth considering.

Last update: Dec 22, 2023

Here's PDD HOLDINGS INC (NASDAQ:PDD) for you, a growth stock our stock screener believes is undervalued. NASDAQ:PDD is scoring impressively in terms of growth while demonstrating strong financials. On top of that, it remains attractively priced. Let's break it down further.

How do we evaluate the Growth for NASDAQ:PDD?

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:PDD was assigned a score of 8 for growth:

The Earnings Per Share has grown by an impressive 49.42% over the past year.
PDD shows a strong growth in Revenue. In the last year, the Revenue has grown by 68.33%.
The Revenue has been growing by 137.06% on average over the past years. This is a very strong growth!
Based on estimates for the next years, PDD will show a quite strong growth in Earnings Per Share. The EPS will grow by 19.97% on average per year.
PDD is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 36.34% yearly.

A Closer Look at Valuation for NASDAQ:PDD

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:PDD scores a 5 out of 10:

Based on the Price/Earnings ratio, PDD is valued a bit cheaper than the industry average as 73.53% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 64.71% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, PDD is valued a bit cheaper than 67.65% of the companies in the same industry.
PDD's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of PDD may justify a higher PE ratio.
PDD's earnings are expected to grow with 34.41% in the coming years. This may justify a more expensive valuation.

Assessing Health Metrics for NASDAQ:PDD

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:PDD, the assigned 7 reflects its health status:

An Altman-Z score of 7.30 indicates that PDD is not in any danger for bankruptcy at the moment.
PDD has a Altman-Z score of 7.30. This is amongst the best in the industry. PDD outperforms 94.12% of its industry peers.
PDD has a debt to FCF ratio of 0.19. This is a very positive value and a sign of high solvency as it would only need 0.19 years to pay back of all of its debts.
PDD's Debt to FCF ratio of 0.19 is amongst the best of the industry. PDD outperforms 94.12% of its industry peers.
A Debt/Equity ratio of 0.01 indicates that PDD is not too dependend on debt financing.
With a decent Debt to Equity ratio value of 0.01, PDD is doing good in the industry, outperforming 79.41% of the companies in the same industry.
The Quick ratio of PDD (1.83) is better than 70.59% of its industry peers.

Profitability Insights: NASDAQ:PDD

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:PDD has earned a 7 out of 10:

PDD has a Return On Assets of 14.70%. This is amongst the best in the industry. PDD outperforms 97.06% of its industry peers.
PDD's Return On Equity of 28.51% is amongst the best of the industry. PDD outperforms 91.18% of its industry peers.
PDD has a better Return On Invested Capital (22.83%) than 94.12% of its industry peers.
PDD's Profit Margin of 23.27% is amongst the best of the industry. PDD outperforms 97.06% of its industry peers.
PDD's Operating Margin of 22.87% is amongst the best of the industry. PDD outperforms 97.06% of its industry peers.
The Gross Margin of PDD (66.98%) is better than 85.29% of its industry peers.
PDD's Gross Margin has improved in the last couple of years.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of PDD

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.