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

Overall PDD gets a fundamental rating of 8 out of 10. We evaluated PDD against 33 industry peers in the Broadline Retail industry. Both the health and profitability get an excellent rating, making PDD a very profitable company, without any liquidiy or solvency issues. PDD has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination! With these ratings, PDD could be worth investigating further 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's Return On Assets of 22.84% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.
PDD's Return On Equity of 38.91% is amongst the best of the industry. PDD outperforms 96.97% of its industry peers.
The Return On Invested Capital of PDD (31.76%) is better 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 11.74%.
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 Profit Margin of 28.93%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.
Looking at the Operating Margin, with a value of 28.57%, PDD belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
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

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.
Compared to 1 year ago, PDD has an improved debt to assets ratio.

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.
The Altman-Z score of PDD (5.56) is better than 81.82% 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.
PDD has a better Debt to FCF ratio (0.04) than 93.94% of its industry peers.
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 78.79% of the companies in the same industry.
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.
The Current ratio of PDD (2.11) is better than 72.73% of its industry peers.
A Quick Ratio of 2.11 indicates that PDD has no problem at all paying its short term obligations.
The Quick ratio of PDD (2.11) is better than 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

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.
Looking at the last year, PDD shows a very strong growth in Revenue. The Revenue has grown by 106.72%.
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)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.
Based on estimates for the next years, PDD will show a very strong growth in Revenue. The Revenue will grow by 26.32% on average per year.
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

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

With a Price/Earnings ratio of 9.08, the valuation of PDD can be described as very 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.
Based on the Price/Forward Earnings ratio of 5.85, the valuation of PDD can be described as very cheap.
Based on the Price/Forward Earnings ratio, PDD is valued cheaper than 87.88% of the companies 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 21.22.
Industry RankSector Rank
PE 9.08
Fwd PE 5.85

4.2 Price Multiples

90.91% of the companies in the same industry are more expensive than PDD, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, PDD is valued cheaply inside the industry as 81.82% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 6.85
EV/EBITDA 4.12

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 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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