Stock Analysis: Affordable Growth

Fundamental Rating

Overall PDD gets a fundamental rating of 8 out of 10. We evaluated PDD against 32 industry peers in the Broadline Retail industry. PDD gets an excellent profitability rating and is at the same time showing great financial health properties. PDD is growing strongly while it also seems undervalued. This is an interesting combination With these ratings, PDD could be worth investigating further for value and growth and quality investing!.

1. Profitability

1.1 Basic Checks

In the past year PDD was profitable.

PDD had a positive operating cash flow in the past year.

In multiple years PDD reported negative net income over the last 5 years.

PDD had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

PDD's Return On Assets of 23.19% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.

The Return On Equity of PDD (38.87%) is better 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 last Return On Invested Capital (31.27%) for PDD is above the 3 year average (17.97%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	23.19%
ROE	38.87%
ROIC	31.27%

ROA(3y)11.61%

ROA(5y)4.23%

ROE(3y)23.06%

ROE(5y)5.8%

ROIC(3y)17.97%

ROIC(5y)N/A

1.3 Margins

PDD's Profit Margin of 29.10% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.

PDD has a better Operating Margin (28.28%) than 100.00% of its industry peers.

With an excellent Gross Margin value of 62.06%, PDD belongs to the best of the industry, outperforming 83.87% of the companies in the same industry.

PDD's Gross Margin has declined in the last couple of years.

		Industry Rank	Sector Rank
OM	28.28%
PM (TTM)	29.1%
GM	62.06%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y-2.34%

GM growth 5Y-4.16%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), PDD is creating value.

PDD has more shares outstanding than it did 1 year ago.

Compared to 5 years ago, PDD has more shares outstanding

PDD has a better debt/assets ratio than last year.

2.2 Solvency

PDD has an Altman-Z score of 5.98. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.

With an excellent Altman-Z score value of 5.98, PDD belongs to the best 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.

The Debt to FCF ratio of PDD (0.04) is better than 93.55% of its industry peers.

A Debt/Equity ratio of 0.02 indicates that PDD is not too dependend on debt financing.

Looking at the Debt to Equity ratio, with a value of 0.02, PDD is in the better half of the industry, outperforming 77.42% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.02
Debt/FCF	0.04
Altman-Z	5.98

ROIC/WACC4.4

WACC7.1%

2.3 Liquidity

A Current Ratio of 2.15 indicates that PDD has no problem at all paying its short term obligations.

With a decent Current ratio value of 2.15, PDD is doing good in the industry, outperforming 70.97% of the companies in the same industry.

A Quick Ratio of 2.15 indicates that PDD has no problem at all paying its short term obligations.

With an excellent Quick ratio value of 2.15, PDD belongs to the best of the industry, outperforming 83.87% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	2.15
Quick Ratio	2.15

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

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!

EPS 1Y (TTM)113.9%

EPS 3YN/A

EPS 5YN/A

EPS Q2Q%60.12%

Revenue 1Y (TTM)87.39%

Revenue growth 3Y60.86%

Revenue growth 5Y79.96%

Sales Q2Q%44.33%

3.2 Future

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.

EPS Next Y79.07%

EPS Next 2Y42.8%

EPS Next 3Y35.68%

EPS Next 5Y23.38%

Revenue Next Year67.82%

Revenue Next 2Y44.82%

Revenue Next 3Y36.25%

Revenue Next 5Y27.1%

3.3 Evolution

Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 9.69, which indicates a very decent valuation of PDD.

Based on the Price/Earnings ratio, PDD is valued cheaper than 80.65% of the companies in the same industry.

Compared to an average S&P500 Price/Earnings ratio of 27.94, PDD is valued rather cheaply.

A Price/Forward Earnings ratio of 8.19 indicates a reasonable valuation of PDD.

87.10% of the companies in the same industry are more expensive than PDD, based on the Price/Forward Earnings ratio.

Compared to an average S&P500 Price/Forward Earnings ratio of 24.11, PDD is valued rather cheaply.

		Industry Rank	Sector Rank
PE	9.69
Fwd PE	8.19

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, PDD is valued cheaply inside the industry as 87.10% of the companies are valued more expensively.

Based on the Price/Free Cash Flow ratio, PDD is valued cheaper than 83.87% of the companies in the same industry.