NASDAQ:PDD, a growth stock which is not overvalued.

Last update: Jan 13, 2025

Our stock screening tool has pinpointed PDD HOLDINGS INC (NASDAQ:PDD) as a growth stock that isn't overvalued. NASDAQ:PDD is excelling in various growth indicators while maintaining a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Evaluating Growth: NASDAQ:PDD

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 113.90%, which is quite impressive.
Looking at the last year, PDD shows a very strong growth in Revenue. The Revenue has grown by 87.39%.
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 23.38% yearly.
Based on estimates for the next years, PDD will show a very strong growth in Revenue. The Revenue will grow by 27.10% on average per year.

Unpacking NASDAQ:PDD's Valuation Rating

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:

A Price/Earnings ratio of 8.69 indicates a reasonable valuation of PDD.
Based on the Price/Earnings ratio, PDD is valued a bit cheaper than 77.42% of the companies in the same industry.
When comparing the Price/Earnings ratio of PDD to the average of the S&P500 Index (26.91), we can say PDD is valued rather cheaply.
With a Price/Forward Earnings ratio of 7.35, the valuation of PDD can be described as very cheap.
Based on the Price/Forward Earnings ratio, PDD is valued cheaper than 83.87% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.26. PDD is valued rather cheaply when compared to this.
90.32% of the companies in the same industry are more expensive than PDD, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 83.87% of the companies listed in the same industry.
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.

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 5.63. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
PDD has a better Altman-Z score (5.63) than 80.65% 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's Debt to FCF ratio of 0.04 is amongst the best of the industry. PDD outperforms 93.55% 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 has a better Debt to Equity ratio (0.02) than 77.42% 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.
PDD has a better Current ratio (2.15) than 70.97% of its industry peers.
A Quick Ratio of 2.15 indicates that PDD has no problem at all paying its short term obligations.
PDD has a Quick ratio of 2.15. This is amongst the best in the industry. PDD outperforms 83.87% of its industry peers.

Assessing Profitability for NASDAQ:PDD

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:PDD has achieved a 8:

PDD has a better Return On Assets (23.19%) than 100.00% of its industry peers.
PDD has a better Return On Equity (38.87%) than 96.77% of its industry peers.
Looking at the Return On Invested Capital, with a value of 31.27%, PDD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for PDD is significantly above the industry average of 11.22%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(31.27%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 29.10%, PDD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
PDD has a Operating Margin of 28.28%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
PDD has a Gross Margin of 62.06%. This is amongst the best in the industry. PDD outperforms 83.87% of its industry peers.

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

For an up to date full fundamental analysis you can check the fundamental report of PDD

Keep in mind

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.