Stock Analysis: Decent Value Stocks

Fundamental Rating

Overall PDD gets a fundamental rating of 8 out of 10. We evaluated PDD 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

PDD had positive earnings in the past year.

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

Looking at the Return On Assets, with a value of 22.84%, 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 38.91%. This is amongst the best in the industry. PDD outperforms 96.88% 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 11.61%.

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 has a Profit Margin of 28.93%. This is amongst the best in 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.

PDD's Gross Margin has declined in the last couple of years.

		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%

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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

PDD has more shares outstanding than it did 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 5.64. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.

Looking at the Altman-Z score, with a value of 5.64, PDD belongs to the top of the industry, outperforming 81.25% of the companies in the same industry.

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.

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 better Debt to Equity ratio (0.02) than 78.13% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.02
Debt/FCF	0.04
Altman-Z	5.64

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.

PDD has a Current ratio of 2.11. This is in the better half of the industry: PDD outperforms 71.88% of its industry peers.

A Quick Ratio of 2.11 indicates that PDD has no problem at all paying 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

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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

The Earnings Per Share has grown by an impressive 112.20% over the past year.

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

The Earnings Per Share is expected to grow by 30.86% on average over the next years. This is a very strong growth

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 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

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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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 9.37 indicates a reasonable valuation of PDD.

Compared to the rest of the industry, the Price/Earnings ratio of PDD indicates a somewhat cheap valuation: PDD is cheaper than 75.00% of the companies listed in the same industry.

When comparing the Price/Earnings ratio of PDD to the average of the S&P500 Index (30.52), we can say PDD is valued rather cheaply.

A Price/Forward Earnings ratio of 6.59 indicates a rather cheap valuation of PDD.

Based on the Price/Forward Earnings ratio, PDD is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.

Compared to an average S&P500 Price/Forward Earnings ratio of 21.99, PDD is valued rather cheaply.

		Industry Rank	Sector Rank
PE	9.37
Fwd PE	6.59

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, PDD is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.

Based on the Price/Free Cash Flow ratio, PDD is valued cheaper than 81.25% of the companies in the same industry.