For those who appreciate value investing, NASDAQ:PDD is a compelling option with its solid fundamentals.

Last update: May 16, 2024

PDD HOLDINGS INC (NASDAQ:PDD) was identified as a decent value stock by our stock screener. NASDAQ:PDD scores well on profitability, solvency and liquidity. At the same time it seems to be priced very reasonably. We'll explore this a bit deeper below.

ChartMill's Evaluation of Valuation

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:PDD has earned a 7 for valuation:

PDD's Price/Earnings ratio is a bit cheaper when compared to the industry. PDD is cheaper than 69.70% of the companies in the same industry.
PDD's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.91.
Based on the Price/Forward Earnings ratio, PDD is valued a bit cheaper than 63.64% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.51. PDD is valued slightly cheaper when compared to this.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 60.61% of the companies listed in the same industry.
75.76% of the companies in the same industry are more expensive than PDD, based on the Price/Free Cash Flow ratio.
PDD's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
PDD has an outstanding profitability rating, which may justify a higher PE ratio.
PDD's earnings are expected to grow with 30.98% in the coming years. This may justify a more expensive valuation.

Looking at the Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:PDD scores a 8 out of 10:

With an excellent Return On Assets value of 17.25%, PDD belongs to the best of the industry, outperforming 96.97% of the companies in the same industry.
With an excellent Return On Equity value of 32.06%, PDD belongs to the best of the industry, outperforming 90.91% of the companies in the same industry.
PDD's Return On Invested Capital of 25.64% is amongst the best of the industry. PDD outperforms 96.97% of its industry peers.
PDD had an Average Return On Invested Capital over the past 3 years of 17.97%. This is significantly above the industry average of 11.25%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(25.64%), indicating increased profibility in the last year.
PDD has a better Profit Margin (24.24%) than 96.97% of its industry peers.
PDD's Operating Margin of 23.70% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
Looking at the Gross Margin, with a value of 62.96%, PDD belongs to the top of the industry, outperforming 84.85% of the companies in the same industry.

Unpacking NASDAQ:PDD's Health Rating

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 7.26. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
PDD has a better Altman-Z score (7.26) than 84.85% of its industry peers.
The Debt to FCF ratio of PDD is 0.06, which is an excellent value as it means it would take PDD, only 0.06 years of fcf income to pay off all of its debts.
PDD has a Debt to FCF ratio of 0.06. This is amongst the best in the industry. PDD outperforms 93.94% of its industry peers.
PDD has a Debt/Equity ratio of 0.03. This is a healthy value indicating a solid balance between debt and equity.
PDD has a better Debt to Equity ratio (0.03) than 78.79% of its industry peers.
PDD's Current ratio of 1.93 is fine compared to the rest of the industry. PDD outperforms 66.67% of its industry peers.
PDD has a Quick ratio of 1.93. This is in the better half of the industry: PDD outperforms 78.79% of its industry peers.

Growth Analysis for NASDAQ:PDD

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:PDD has earned a 8 for growth:

The Earnings Per Share has grown by an impressive 68.74% over the past year.
Looking at the last year, PDD shows a very strong growth in Revenue. The Revenue has grown by 89.68%.
PDD shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 79.96% yearly.
PDD is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 30.98% yearly.
The Revenue is expected to grow by 22.61% on average over the next years. This is a very strong growth

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Check the latest full fundamental report of PDD for a complete fundamental analysis.

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.