NASDAQ:PDD is not too expensive for the growth it is showing.

Last update: Dec 23, 2024

PDD HOLDINGS INC (NASDAQ:PDD) has caught the eye of our stock screener as an affordable growth stock. NASDAQ:PDD is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

ChartMill's Evaluation of Growth

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:

PDD shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 113.90%, which is quite impressive.
PDD shows a strong growth in Revenue. In the last year, the Revenue has grown by 87.39%.
The Revenue has been growing by 79.96% on average over the past years. This is a very strong growth!
The Earnings Per Share is expected to grow by 23.38% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 27.10% on average over the next years. This is a very strong growth

Understanding NASDAQ:PDD's Valuation Score

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 9 reflects its valuation:

PDD is valuated reasonably with a Price/Earnings ratio of 9.10.
PDD's Price/Earnings ratio is a bit cheaper when compared to the industry. PDD is cheaper than 78.13% of the companies in the same industry.
When comparing the Price/Earnings ratio of PDD to the average of the S&P500 Index (27.20), we can say PDD is valued rather cheaply.
The Price/Forward Earnings ratio is 7.69, which indicates a rather cheap valuation of PDD.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 84.38% of the companies listed in the same industry.
PDD is valuated cheaply when we compare the Price/Forward Earnings ratio to 23.73, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, PDD is valued cheaper than 87.50% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, PDD is valued cheaply inside the industry as 84.38% of the companies are valued more expensively.
The 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 35.68% in the coming years.

Analyzing Health Metrics

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NASDAQ:PDD scores a 9 out of 10:

PDD has an Altman-Z score of 5.77. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of PDD (5.77) is better than 81.25% of its industry peers.
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.
PDD has a Debt to FCF ratio of 0.04. This is amongst the best in the industry. PDD outperforms 93.75% of its industry peers.
A Debt/Equity ratio of 0.02 indicates that PDD is not too dependend on debt financing.
The Debt to Equity ratio of PDD (0.02) is better than 78.13% of its industry peers.
PDD has a Current Ratio of 2.15. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of PDD (2.15) is better than 68.75% of its industry peers.
PDD has a Quick Ratio of 2.15. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.
The Quick ratio of PDD (2.15) is better than 81.25% of its industry peers.

Assessing 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 8 is noteworthy for profitability:

Looking at the Return On Assets, with a value of 23.19%, PDD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
With an excellent Return On Equity value of 38.87%, PDD belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
PDD's Return On Invested Capital of 31.27% is amongst the best of the industry. PDD outperforms 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 11.71%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(31.27%), indicating increased profibility in the last year.
PDD has a Profit Margin of 29.10%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
With an excellent Operating Margin value of 28.28%, PDD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
Looking at the Gross Margin, with a value of 62.06%, PDD belongs to the top of the industry, outperforming 84.38% of the companies in the same industry.

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

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.