Don't overlook NASDAQ:PDD—it's a hidden gem with strong fundamentals and an attractive price tag.

Last update: Jun 6, 2024

Our stock screening tool has pinpointed PDD HOLDINGS INC (NASDAQ:PDD) as an undervalued stock option. NASDAQ:PDD retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Understanding NASDAQ:PDD's Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:PDD, the assigned 7 reflects its valuation:

Compared to the rest of the industry, the Price/Earnings ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 65.63% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of PDD to the average of the S&P500 Index (28.27), we can say PDD is valued slightly cheaper.
A Price/Forward Earnings ratio of 11.99 indicates a reasonable valuation of PDD.
Based on the Price/Forward Earnings ratio, PDD is valued a bit cheaper than the industry average as 65.63% of the companies are valued more expensively.
PDD's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.11.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 65.63% of the companies listed in the same industry.
PDD's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. PDD is cheaper than 71.88% 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.
PDD has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as PDD's earnings are expected to grow with 31.67% in the coming years.

Looking at the Profitability

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NASDAQ:PDD, the assigned 8 is a significant indicator of profitability:

With an excellent Return On Assets value of 21.15%, PDD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
With an excellent Return On Equity value of 36.54%, PDD belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
PDD has a better Return On Invested Capital (29.27%) than 100.00% 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 11.27%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(29.27%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 26.93%, PDD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
Looking at the Operating Margin, with a value of 26.19%, PDD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
PDD has a better Gross Margin (61.83%) than 84.38% of its industry peers.

Assessing Health Metrics for NASDAQ:PDD

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:PDD was assigned a score of 9 for health:

PDD has an Altman-Z score of 7.79. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of PDD (7.79) is better than 87.50% of its industry peers.
PDD has a debt to FCF ratio of 0.05. This is a very positive value and a sign of high solvency as it would only need 0.05 years to pay back of all of its debts.
PDD has a better Debt to FCF ratio (0.05) than 93.75% of its industry peers.
PDD has a Debt/Equity ratio of 0.02. This is a healthy value indicating a solid balance between debt and equity.
PDD's Debt to Equity ratio of 0.02 is amongst the best of the industry. PDD outperforms 81.25% of its industry peers.
PDD has a Current Ratio of 2.09. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.
PDD's Current ratio of 2.09 is fine compared to the rest of the industry. PDD outperforms 75.00% of its industry peers.
A Quick Ratio of 2.09 indicates that PDD has no problem at all paying its short term obligations.
PDD has a Quick ratio of 2.09. This is amongst the best in the industry. PDD outperforms 84.38% of its industry peers.

Deciphering NASDAQ:PDD's Growth Rating

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NASDAQ:PDD boasts a 8 out of 10:

PDD shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 91.34%, which is quite impressive.
PDD shows a strong growth in Revenue. In the last year, the Revenue has grown by 105.55%.
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 31.67% yearly.
PDD is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 22.61% yearly.

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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.