Decent Value Stocks. Analyze the stocks with a good fundamental valuation, while still showing decent profitability, health and growth.


PDD HOLDINGS INC

Nasdaq / Consumer Discretionary / Broadline Retail

Fundamental Rating

8

PDD gets a fundamental rating of 8 out of 10. The analysis compared the fundamentals 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. An interesting combination arises when we look at growth and value: PDD is growing strongly while it also seems undervalued. These ratings would make PDD suitable for value and growth and quality investing!



8

1. Profitability

1.1 Basic Checks

In the past year PDD was profitable.
PDD had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: PDD reported negative net income in multiple years.
Each year in the past 5 years PDD had a positive operating cash flow.

1.2 Ratios

Looking at the Return On Assets, with a value of 23.19%, PDD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
PDD has a Return On Equity of 38.87%. This is amongst the best in the industry. PDD outperforms 93.75% of its industry peers.
PDD has a better Return On Invested Capital (31.27%) than 100.00% of its industry peers.
PDD had an Average Return On Invested Capital over the past 3 years of 17.97%. This is significantly above the industry average of 11.71%.
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 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

With an excellent Profit Margin value of 29.10%, PDD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
PDD's Operating Margin of 28.28% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
The Gross Margin of PDD (62.06%) is better than 84.38% 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

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

2.2 Solvency

PDD has an Altman-Z score of 5.91. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.
PDD has a better Altman-Z score (5.91) than 81.25% 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.
The Debt to FCF ratio of PDD (0.04) is better than 93.75% of its industry peers.
A Debt/Equity ratio of 0.02 indicates that PDD is not too dependend on debt financing.
PDD's Debt to Equity ratio of 0.02 is fine compared to the rest of the industry. PDD outperforms 78.13% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.02
Debt/FCF 0.04
Altman-Z 5.91
ROIC/WACC4.34
WACC7.2%

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.
The Current ratio of PDD (2.15) is better than 68.75% 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.
With an excellent Quick ratio value of 2.15, PDD belongs to the best of the industry, outperforming 81.25% 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

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.
The Revenue has grown by 87.39% in the past year. This is a very strong growth!
Measured over the past years, PDD shows a very strong growth in Revenue. The Revenue has been growing by 79.96% on average per year.
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 Y78.39%
EPS Next 2Y43.33%
EPS Next 3Y35.67%
EPS Next 5Y23.38%
Revenue Next Year68.37%
Revenue Next 2Y45.68%
Revenue Next 3Y36.79%
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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10

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 9.49, the valuation of PDD can be described as very reasonable.
Based on the Price/Earnings ratio, PDD is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 29.16. PDD is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 7.97, which indicates a rather cheap valuation of PDD.
Based on the Price/Forward Earnings ratio, PDD is valued cheaper than 81.25% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.72. PDD is valued rather cheaply when compared to this.
Industry RankSector Rank
PE 9.49
Fwd PE 7.97

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, PDD is valued cheaper than 87.50% of the companies in the same industry.
87.50% of the companies in the same industry are more expensive than PDD, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 8.14
EV/EBITDA 4.77

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.
The excellent profitability rating of PDD may justify a higher PE ratio.
PDD's earnings are expected to grow with 35.67% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.12
PEG (5Y)N/A
EPS Next 2Y43.33%
EPS Next 3Y35.67%

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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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