While growth is established for NASDAQ:PDD, the stock's valuation remains reasonable.

PDD HOLDINGS INC (NASDAQ:PDD) was identified as an affordable growth stock by our stock screener. NASDAQ:PDD is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

What does the Growth looks like for NASDAQ:PDD

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.
• Looking at the last year, PDD shows a very strong growth in Revenue. The Revenue has grown by 106.72%.
• 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 30.86% yearly.
• PDD is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 26.32% yearly.

Valuation Examination 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 8 for valuation:

• Based on the Price/Earnings ratio, PDD is valued a bit cheaper than the industry average as 62.50% of the companies are valued more expensively.
• PDD's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.94.
• PDD is valuated reasonably with a Price/Forward Earnings ratio of 8.81.
• PDD's Price/Forward Earnings ratio is rather cheap when compared to the industry. PDD is cheaper than 81.25% of the companies in the same industry.
• The average S&P500 Price/Forward Earnings ratio is at 24.03. PDD is valued rather cheaply when compared to this.
• PDD's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PDD is cheaper than 68.75% of the companies in the same industry.
• Based on the Price/Free Cash Flow ratio, PDD is valued a bit cheaper than 78.13% 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 38.57% in the coming years.

Assessing Health for NASDAQ:PDD

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:PDD has earned a 9 out of 10:

• An Altman-Z score of 6.69 indicates that PDD is not in any danger for bankruptcy at the moment.
• With an excellent Altman-Z score value of 6.69, PDD belongs to the best of the industry, outperforming 84.38% of the companies in the same industry.
• PDD has a debt to FCF ratio of 0.04. This is a very positive value and a sign of high solvency as it would only need 0.04 years to pay back of all of its debts.
• Looking at the Debt to FCF ratio, with a value of 0.04, 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 0.02. This is a healthy value indicating a solid balance between debt and equity.
• PDD has a Debt to Equity ratio of 0.02. This is in the better half 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.
• Looking at the Current ratio, with a value of 2.11, PDD is in the better half of the industry, outperforming 68.75% of the companies in the same industry.
• 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.
• Looking at the Quick ratio, with a value of 2.11, PDD belongs to the top of the industry, outperforming 81.25% of the companies in the same industry.

Assessing Profitability for NASDAQ:PDD

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:PDD was assigned a score of 8 for profitability:

• The Return On Assets of PDD (22.84%) is better than 100.00% of its industry peers.
• PDD's Return On Equity of 38.91% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
• PDD has a Return On Invested Capital of 31.76%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for PDD is significantly above the industry average of 11.48%.
• 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.
• The Operating Margin of PDD (28.57%) is better than 100.00% of its industry peers.
• PDD has a Gross Margin of 62.44%. This is amongst the best in the industry. PDD outperforms 84.38% of its industry peers.

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

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

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.