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

Taking everything into account, PDD scores 8 out of 10 in our fundamental rating. PDD was compared to 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

PDD had positive earnings in the past year.
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 has a better Return On Assets (23.19%) 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 93.75% of its industry peers.
PDD has a better Return On Invested Capital (31.27%) than 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 11.71%.
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

PDD has a Profit Margin of 29.10%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
PDD's Operating Margin of 28.28% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
PDD has a Gross Margin of 62.06%. This is amongst the best in the industry. PDD outperforms 84.38% 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

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

2.2 Solvency

An Altman-Z score of 5.77 indicates that PDD is not in any danger for bankruptcy at the moment.
PDD has a better Altman-Z score (5.77) than 81.25% of its industry peers.
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.
Looking at the Debt to FCF ratio, with a value of 0.04, PDD belongs to the top of the industry, outperforming 93.75% 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.
PDD has a Debt to Equity ratio of 0.02. This is in the better half of the industry: PDD outperforms 78.13% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.02
Debt/FCF 0.04
Altman-Z 5.77
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 68.75% 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.
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.
The Revenue is expected to grow by 27.10% on average over the next years. This is a very strong growth
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

The Price/Earnings ratio is 9.11, which indicates a very decent valuation of PDD.
Compared to the rest of the industry, the Price/Earnings ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 81.25% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of PDD to the average of the S&P500 Index (27.54), we can say PDD is valued rather cheaply.
PDD is valuated cheaply with a Price/Forward Earnings ratio of 7.70.
87.50% of the companies in the same industry are more expensive than PDD, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of PDD to the average of the S&P500 Index (23.99), we can say PDD is valued rather cheaply.
Industry RankSector Rank
PE 9.11
Fwd PE 7.7

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.
Based on the Price/Free Cash Flow ratio, PDD is valued cheaper than 84.38% of the companies in the same industry.
Industry RankSector Rank
P/FCF 7.82
EV/EBITDA 4.38

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 35.68% in the coming years.
PEG (NY)0.12
PEG (5Y)N/A
EPS Next 2Y42.8%
EPS Next 3Y35.68%

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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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