Despite its impressive fundamentals, NASDAQ:PDD remains undervalued.

Last update: Sep 24, 2024

Consider PDD HOLDINGS INC (NASDAQ:PDD) as a top value stock, identified by our stock screening tool. NASDAQ:PDD shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

How do we evaluate the Valuation for NASDAQ:PDD?

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 9 for valuation:

Based on the Price/Earnings ratio of 9.90, the valuation of PDD can be described as reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 68.75% of the companies listed in the same industry.
PDD's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 30.69.
Based on the Price/Forward Earnings ratio of 6.96, the valuation of PDD can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 81.25% of the companies listed in the same industry.
PDD is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.27, which is the current average of the S&P500 Index.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 84.38% of the companies listed in the same industry.
PDD's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PDD is cheaper than 81.25% 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 excellent profitability rating of PDD may justify a higher PE ratio.
PDD's earnings are expected to grow with 38.66% in the coming years. This may justify a more expensive valuation.

Exploring NASDAQ:PDD's Profitability

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 8 is noteworthy for profitability:

With an excellent Return On Assets value of 22.84%, PDD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
Looking at the Return On Equity, with a value of 38.91%, PDD belongs to the top of the industry, outperforming 96.88% of the companies in the same industry.
The Return On Invested Capital of PDD (31.76%) is better than 100.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PDD is significantly above the industry average of 11.61%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(31.76%), indicating increased profibility in the last year.
PDD has a better Profit Margin (28.93%) than 100.00% of its industry peers.
PDD has a Operating Margin of 28.57%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
PDD has a better Gross Margin (62.44%) than 84.38% of its industry peers.

Understanding NASDAQ:PDD's Health Score

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:PDD has achieved a 9 out of 10:

PDD has an Altman-Z score of 5.86. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.86, PDD belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
The Debt to FCF ratio of PDD is 0.04, which is an excellent value as it means it would take PDD, only 0.04 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 0.04, PDD belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
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 fine compared to the rest of the industry. PDD outperforms 78.13% of its industry peers.
A Current Ratio of 2.11 indicates that PDD has no problem at all paying its short term obligations.
PDD has a Current ratio of 2.11. This is in the better half of the industry: PDD outperforms 71.88% of its industry peers.
PDD has a Quick Ratio of 2.11. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.
PDD has a Quick ratio of 2.11. This is amongst the best in the industry. PDD outperforms 81.25% of its industry peers.

Deciphering NASDAQ:PDD's Growth Rating

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:PDD, the assigned 8 reflects its growth potential:

PDD shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 112.20%, which is quite impressive.
The Revenue has grown by 106.72% 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 79.96% on average per year.
PDD is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 30.86% yearly.
Based on estimates for the next years, PDD will show a very strong growth in Revenue. The Revenue will grow by 26.32% on average per year.

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

Our latest full fundamental report of PDD contains the most current fundamental analsysis.

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.