Stock Analysis: Decent Value Stocks

Fundamental Rating

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 gets an excellent profitability rating and is at the same time showing great financial health properties. PDD is evaluated to be cheap and growing strongly. This does not happen too often! These ratings could make PDD a good candidate for value and growth and quality investing.

1. Profitability

1.1 Basic Checks

In the past year PDD was profitable.

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

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.

The Return On Invested Capital of PDD (31.27%) is better than 100.00% of its industry peers.

The Average Return On Invested Capital over the past 3 years for PDD is significantly above the industry average of 11.71%.

The 3 year average ROIC (17.97%) for PDD is below the current ROIC(31.27%), indicating increased profibility in the last year.

		Industry Rank	Sector 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's Profit Margin of 29.10% is amongst the best of the industry. PDD outperforms 100.00% of its industry peers.

PDD has a Operating Margin of 28.28%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.

With an excellent Gross Margin value of 62.06%, PDD belongs to the best of the industry, outperforming 84.38% of the companies in the same industry.

In the last couple of years the Gross Margin of PDD has declined.

		Industry Rank	Sector 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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ROA

ROE

ROIC

Operating and Profit Margin

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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.

Compared to 1 year ago, PDD has more shares outstanding

The number of shares outstanding for PDD has been increased compared to 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 5.77. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.

PDD has a better Altman-Z score (5.77) 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.

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 Rank	Sector 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.

The Current ratio of PDD (2.15) is better than 68.75% of its industry peers.

A Quick Ratio of 2.15 indicates that PDD has no problem at all paying its short term obligations.

PDD's Quick ratio of 2.15 is amongst the best of the industry. PDD outperforms 81.25% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.15
Quick Ratio	2.15

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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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!

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

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 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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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 9.03, which indicates a very decent valuation of PDD.

81.25% of the companies in the same industry are more expensive than PDD, based on the Price/Earnings ratio.

Compared to an average S&P500 Price/Earnings ratio of 27.54, PDD is valued rather cheaply.

PDD is valuated cheaply with a Price/Forward Earnings ratio of 7.64.

87.50% of the companies in the same industry are more expensive than PDD, based on the Price/Forward Earnings ratio.

Compared to an average S&P500 Price/Forward Earnings ratio of 23.99, PDD is valued rather cheaply.

		Industry Rank	Sector Rank
PE	9.03
Fwd PE	7.64

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.

Based on the Price/Free Cash Flow ratio, PDD is valued cheaply inside the industry as 84.38% of the companies are valued more expensively.