Stock Analysis: Decent Value Stocks

Fundamental Rating

We assign a fundamental rating of 8 out of 10 to PDD. 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. This makes PDD very considerable for value and growth and quality investing!

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.

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 better Return On Assets (22.84%) than 100.00% of its industry peers.

PDD has a better Return On Equity (38.91%) than 96.88% of its industry peers.

PDD has a better Return On Invested Capital (31.76%) 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 11.61%.

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 Rank	Sector 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's Profit Margin of 28.93% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.

PDD's Operating Margin of 28.57% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.

PDD has a Gross Margin of 62.44%. 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 Rank	Sector 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%

More info and screens

ROA

ROE

ROIC

Operating and Profit Margin

Show most profitable peers

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.

The number of shares outstanding for PDD has been increased compared to 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 5.75. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.

PDD has a Altman-Z score of 5.75. This is amongst the best in the industry. PDD outperforms 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 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 Rank	Sector Rank
Debt/Equity	0.02
Debt/FCF	0.04
Altman-Z	5.75

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.

The Current ratio of PDD (2.11) is better than 71.88% 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.

With an excellent Quick ratio value of 2.11, PDD belongs to the best of the industry, outperforming 81.25% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	2.11
Quick Ratio	2.11

More info and screens

WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

Show peers with great health

3. Growth

3.1 Past

PDD shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 112.20%, which is quite impressive.

PDD shows a strong growth in Revenue. In the last year, the Revenue has grown by 106.72%.

PDD shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 79.96% yearly.

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

Based on estimates for the next years, PDD will show a very strong growth in Earnings Per Share. The EPS will grow by 30.86% on average per year.

PDD is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 26.32% yearly.

EPS Next Y86.66%

EPS Next 2Y49.66%

EPS Next 3Y38.66%

EPS Next 5Y30.86%

Revenue Next Year70.89%

Revenue Next 2Y48%

Revenue Next 3Y37.93%

Revenue Next 5Y26.32%

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.

More info and screens

Find the best growth stocks

Show best growing peers

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 9.60, the valuation of PDD can be described as reasonable.

71.88% of the companies in the same industry are more expensive than PDD, based on the Price/Earnings ratio.

PDD's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 30.57.

With a Price/Forward Earnings ratio of 6.74, the valuation of PDD can be described as very cheap.

Compared to the rest of the industry, the Price/Forward Earnings ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 81.25% of the companies listed in the same industry.

PDD's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.04.

		Industry Rank	Sector Rank
PE	9.6
Fwd PE	6.74

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 87.50% 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 81.25% of the companies in the same industry.