Affordable Growth. Analyze the stocks which are showing good growth, decent profitability and health and are not overvalued from a fundamental perspective.


PDD HOLDINGS INC

Nasdaq / Consumer Discretionary / Broadline Retail

Fundamental Rating

8

Overall PDD gets a fundamental rating of 8 out of 10. We evaluated PDD against 32 industry peers in the Broadline Retail industry. PDD has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. PDD is evaluated to be cheap and growing strongly. This does not happen too often! This makes PDD very considerable for value and growth and quality investing!



8

1. Profitability

1.1 Basic Checks

In the past year PDD was profitable.
In the past year PDD had a positive cash flow from operations.
In multiple years PDD reported negative net income over the last 5 years.
Each year in the past 5 years PDD had a positive operating cash flow.

1.2 Ratios

The Return On Assets of PDD (23.19%) is better than 100.00% of its industry peers.
PDD has a Return On Equity of 38.87%. This is amongst the best in the industry. PDD outperforms 93.55% of its industry peers.
PDD has a Return On Invested Capital of 31.27%. 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 11.65%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(31.27%), indicating increased profibility in the last year.
Industry RankSector 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.
Looking at the Operating Margin, with a value of 28.28%, PDD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
The Gross Margin of PDD (62.06%) is better than 83.87% of its industry peers.
In the last couple of years the Gross Margin of PDD has declined.
Industry RankSector 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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9

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PDD is creating value.
The number of shares outstanding for PDD has been increased compared to 1 year ago.
PDD has more shares outstanding than it did 5 years ago.
The debt/assets ratio for PDD has been reduced compared to a year ago.

2.2 Solvency

PDD has an Altman-Z score of 5.69. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.69, 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 has a Debt to FCF ratio of 0.04. This is amongst the best in 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.
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 RankSector Rank
Debt/Equity 0.02
Debt/FCF 0.04
Altman-Z 5.69
ROIC/WACC4.33
WACC7.23%

2.3 Liquidity

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.
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.
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.
PDD's Quick ratio of 2.15 is amongst the best of the industry. PDD outperforms 83.87% of its industry peers.
Industry RankSector Rank
Current Ratio 2.15
Quick Ratio 2.15

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8

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 113.90% over the past year.
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

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.
PDD is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 27.10% yearly.
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

The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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10

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 8.87, the valuation of PDD can be described as very reasonable.
Based on the Price/Earnings ratio, PDD is valued cheaply inside the industry as 80.65% of the companies are valued more expensively.
PDD is valuated cheaply when we compare the Price/Earnings ratio to 27.17, which is the current average of the S&P500 Index.
PDD is valuated cheaply with a Price/Forward Earnings ratio of 7.49.
83.87% of the companies in the same industry are more expensive than PDD, based on the Price/Forward Earnings ratio.
PDD's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 23.59.
Industry RankSector Rank
PE 8.87
Fwd PE 7.49

4.2 Price Multiples

87.10% of the companies in the same industry are more expensive than PDD, based on the Enterprise Value to EBITDA ratio.
PDD's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PDD is cheaper than 83.87% of the companies in the same industry.
Industry RankSector Rank
P/FCF 7.61
EV/EBITDA 4.12

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of PDD may justify a higher PE ratio.
PDD's earnings are expected to grow with 35.68% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.11
PEG (5Y)N/A
EPS Next 2Y42.8%
EPS Next 3Y35.68%

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0

5. Dividend

5.1 Amount

PDD does not give a dividend.
Industry RankSector Rank
Dividend Yield N/A

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