Is NASDAQ:PDD on the Verge of a Major Breakout as a Strong Growth Stock?

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether PDD HOLDINGS INC (NASDAQ:PDD) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but PDD HOLDINGS INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

How We Gauge Growth for NASDAQ:PDD

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:PDD has achieved 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%.
• The Revenue has been growing by 79.96% on average over the past years. This is a very strong growth!
• Based on estimates for the next years, PDD will show a very strong growth in Earnings Per Share. The EPS will grow by 23.38% on average per year.
• Based on estimates for the next years, PDD will show a very strong growth in Revenue. The Revenue will grow by 26.33% on average per year.

Health Examination for NASDAQ:PDD

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:

• An Altman-Z score of 6.19 indicates that PDD is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 6.19, PDD belongs to the top of the industry, outperforming 80.65% 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.
• PDD's Debt to FCF ratio of 0.04 is amongst the best of the industry. PDD outperforms 93.55% of its industry peers.
• A Debt/Equity ratio of 0.02 indicates that PDD is not too dependend on debt financing.
• PDD has a Debt to Equity ratio of 0.02. This is in the better half of the industry: PDD outperforms 77.42% of its industry peers.
• A Current Ratio of 2.15 indicates that PDD has no problem at all paying its short term obligations.
• The Current ratio of PDD (2.15) is better 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's Quick ratio of 2.15 is amongst the best of the industry. PDD outperforms 83.87% of its industry peers.

Analyzing Profitability Metrics

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 (23.19%) is better than 100.00% of its industry peers.
• The Return On Equity of PDD (38.87%) is better than 96.77% of its industry peers.
• PDD's Return On Invested Capital of 31.27% is amongst the best of 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 11.22%.
• The last Return On Invested Capital (31.27%) for PDD is above the 3 year average (17.97%), which is a sign of increasing profitability.
• PDD has a Profit Margin of 29.10%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
• PDD's Operating Margin of 28.28% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
• PDD's Gross Margin of 62.06% is amongst the best of the industry. PDD outperforms 83.87% of its industry peers.

How does the Setup look for NASDAQ:PDD

Alongside the Technical Rating, ChartMill assigns a Setup Rating to evaluate the consolidation level of a stock. This rating, ranging from 0 to 10, is updated daily and considers various short-term technical indicators. The current setup rating for NASDAQ:PDD is 7:

PDD has only a medium technical rating, but it does show a decent setup pattern. We see reduced volatility while prices have been consolidating in the most recent period. A pullback is taking place, which may present a nice opportunity for an entry. There is a resistance zone just above the current price starting at 112.73. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 107.86, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

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

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

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.