Why NASDAQ:PDD Is a Promising High-Growth Stock in the Midst of Consolidation.

Last update: Jan 24, 2024

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether PDD HOLDINGS INC (NASDAQ:PDD) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but PDD HOLDINGS INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Assessing Growth for NASDAQ:PDD

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:PDD has achieved a 8 out of 10:

The Earnings Per Share has grown by an impressive 49.42% over the past year.
The Revenue has grown by 68.33% in the past year. This is a very strong growth!
Measured over the past years, PDD shows a very strong growth in Revenue. The Revenue has been growing by 137.06% on average per year.
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.

Health Analysis for NASDAQ:PDD

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:PDD, the assigned 7 for health provides valuable insights:

PDD has an Altman-Z score of 7.10. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of PDD (7.10) is better than 93.75% 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.
Looking at the Debt to FCF ratio, with a value of 0.19, PDD belongs to the top of the industry, outperforming 93.75% of the companies in the same industry.
PDD has a Debt/Equity ratio of 0.01. This is a healthy value indicating a solid balance between debt and equity.
PDD has a Debt to Equity ratio of 0.01. This is in the better half of the industry: PDD outperforms 78.13% of its industry peers.
PDD has a better Quick ratio (1.83) than 68.75% of its industry peers.

How do we evaluate the Profitability for NASDAQ:PDD?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:PDD, the assigned 7 is noteworthy for profitability:

PDD's Return On Assets of 14.70% is amongst the best of the industry. PDD outperforms 96.88% of its industry peers.
With an excellent Return On Equity value of 28.51%, PDD belongs to the best of the industry, outperforming 90.63% of the companies in the same industry.
With an excellent Return On Invested Capital value of 22.83%, PDD belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
PDD has a better Profit Margin (23.27%) than 96.88% of its industry peers.
With an excellent Operating Margin value of 22.87%, PDD belongs to the best of the industry, outperforming 96.88% of the companies in the same industry.
The Gross Margin of PDD (66.98%) is better than 84.38% of its industry peers.
In the last couple of years the Gross Margin of PDD has grown nicely.

How does the Setup look for NASDAQ:PDD

In addition to the Technical Rating, ChartMill provides a Setup Rating for each stock. This rating, ranging from 0 to 10, assesses the extent of consolidation in the stock based on multiple short-term technical indicators. Currently, NASDAQ:PDD has a 8 as its setup rating:

Besides having an excellent technical rating, PDD also presents a decent setup pattern. Prices have been consolidating lately. A pullback is taking place, which may present a nice opportunity for an entry. There is a resistance zone just above the current price starting at 148.64. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 140.89, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

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

For an up to date full technical analysis you can check the technical 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.