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 growing strongly while it also seems undervalued. This is an interesting combination These ratings would make PDD suitable for value and growth and quality investing!



8

1. Profitability

1.1 Basic Checks

PDD had positive earnings in the past year.
In the past year PDD had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: PDD reported negative net income in multiple years.
PDD had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

PDD has a Return On Assets of 23.19%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
PDD's Return On Equity of 38.87% is amongst the best of the industry. PDD outperforms 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.
PDD had an Average Return On Invested Capital over the past 3 years of 17.97%. This 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.
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

The Profit Margin of PDD (29.10%) is better than 100.00% of its industry peers.
PDD has a better Operating Margin (28.28%) than 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.
PDD's Gross Margin has declined in the last couple of years.
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

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

An Altman-Z score of 5.63 indicates that PDD is not in any danger for 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.
With an excellent Debt to FCF ratio value of 0.04, PDD belongs to the best of the industry, outperforming 93.55% of the companies in the same industry.
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 RankSector Rank
Debt/Equity 0.02
Debt/FCF 0.04
Altman-Z 5.63
ROIC/WACC4.33
WACC7.23%

2.3 Liquidity

A Current Ratio of 2.15 indicates that PDD has no problem at all paying its short term obligations.
PDD has a better Current ratio (2.15) than 70.97% of its industry peers.
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.
Looking at the Quick ratio, with a value of 2.15, PDD belongs to the top of the industry, outperforming 83.87% of the companies in the same industry.
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

The Earnings Per Share is expected to grow by 23.38% on average over the next years. This is a very strong growth
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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9

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 8.69, which indicates a very decent valuation of PDD.
Compared to the rest of the industry, the Price/Earnings ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 77.42% of the companies listed in the same industry.
PDD's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.91.
PDD is valuated cheaply with a Price/Forward Earnings ratio of 7.35.
Based on the Price/Forward Earnings ratio, PDD is valued cheaply inside the industry as 83.87% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 23.26, PDD is valued rather cheaply.
Industry RankSector Rank
PE 8.69
Fwd PE 7.35

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, PDD is valued cheaply inside the industry as 90.32% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, PDD is valued cheaply inside the industry as 83.87% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 7.46
EV/EBITDA 3.94

4.3 Compensation for Growth

PDD's 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.
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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