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 33 industry peers in the Broadline Retail industry. PDD scores excellent points on both the profitability and health parts. This is a solid base for a good stock. PDD is evaluated to be cheap and growing strongly. This does not happen too often! With these ratings, PDD could be worth investigating further 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.
In the past 5 years PDD always reported a positive cash flow from operatings.

1.2 Ratios

PDD has a Return On Assets of 22.84%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
PDD has a Return On Equity of 38.91%. This is amongst the best in the industry. PDD outperforms 96.97% of its industry peers.
PDD's Return On Invested Capital of 31.76% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PDD is significantly above the industry average of 11.74%.
The last Return On Invested Capital (31.76%) for PDD is above the 3 year average (17.97%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 22.84%
ROE 38.91%
ROIC 31.76%
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 has a better Profit Margin (28.93%) than 100.00% of its industry peers.
PDD has a better Operating Margin (28.57%) than 100.00% of its industry peers.
With an excellent Gross Margin value of 62.44%, PDD belongs to the best of the industry, outperforming 84.85% of the companies in the same industry.
In the last couple of years the Gross Margin of PDD has declined.
Industry RankSector Rank
OM 28.57%
PM (TTM) 28.93%
GM 62.44%
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.
Compared to 5 years ago, PDD has more shares outstanding
The debt/assets ratio for PDD has been reduced compared to a year ago.

2.2 Solvency

PDD has an Altman-Z score of 5.56. 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 5.56, PDD belongs to the top of the industry, outperforming 81.82% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 0.04, PDD belongs to the top of the industry, outperforming 93.94% of the companies in the same industry.
PDD has a Debt/Equity ratio of 0.02. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of PDD (0.02) is better than 78.79% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.02
Debt/FCF 0.04
Altman-Z 5.56
ROIC/WACC4.22
WACC7.53%

2.3 Liquidity

A Current Ratio of 2.11 indicates that PDD has no problem at all paying its short term obligations.
PDD's Current ratio of 2.11 is fine compared to the rest of the industry. PDD outperforms 72.73% of its industry peers.
PDD has a Quick Ratio of 2.11. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.
PDD has a Quick ratio of 2.11. This is amongst the best in the industry. PDD outperforms 81.82% of its industry peers.
Industry RankSector Rank
Current Ratio 2.11
Quick Ratio 2.11

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8

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 112.20% over the past year.
PDD shows a strong growth in Revenue. In the last year, the Revenue has grown by 106.72%.
The Revenue has been growing by 79.96% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)112.2%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%121.97%
Revenue 1Y (TTM)106.72%
Revenue growth 3Y60.86%
Revenue growth 5Y79.96%
Sales Q2Q%85.65%

3.2 Future

PDD is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 30.86% yearly.
The Revenue is expected to grow by 26.32% on average over the next years. This is a very strong growth
EPS Next Y89.36%
EPS Next 2Y56.31%
EPS Next 3Y44.25%
EPS Next 5Y30.86%
Revenue Next Year76.49%
Revenue Next 2Y52.37%
Revenue Next 3Y41.02%
Revenue Next 5Y26.32%

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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9

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 9.08, the valuation of PDD can be described as reasonable.
75.76% of the companies in the same industry are more expensive than PDD, based on the Price/Earnings ratio.
PDD is valuated cheaply when we compare the Price/Earnings ratio to 29.62, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 5.85 indicates a rather cheap valuation of PDD.
PDD's Price/Forward Earnings ratio is rather cheap when compared to the industry. PDD is cheaper than 87.88% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.22. PDD is valued rather cheaply when compared to this.
Industry RankSector Rank
PE 9.08
Fwd PE 5.85

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 90.91% of the companies listed in the same industry.
PDD's Price/Free Cash Flow ratio is rather cheap when compared to the industry. PDD is cheaper than 81.82% of the companies in the same industry.
Industry RankSector Rank
P/FCF 6.85
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.
A more expensive valuation may be justified as PDD's earnings are expected to grow with 44.25% in the coming years.
PEG (NY)0.1
PEG (5Y)N/A
EPS Next 2Y56.31%
EPS Next 3Y44.25%

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0

5. Dividend

5.1 Amount

No dividends for PDD!.
Industry RankSector Rank
Dividend Yield N/A

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