A strong performer from today's morning trading session is JD.com, whose shares rose 2.8% to $35.03 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
The Market Is Undervaluing JD.com:
JD.com, Inc. provides supply chain-based technologies and services in the People's Republic of China. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.33 and an average price to book (P/B) ratio of 3.12. In contrast, JD.com has a trailing 12 month P/E ratio of 21.1 and a P/B ratio of 0.26.
JD.com's PEG ratio is 26.62, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company Has a Positive Net Current Asset Value:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $576,888 | $745,802 | $951,592 | $1,046,236 |
| Gross Margins | 14.6% | 14.6% | 13.6% | 14.1% |
| Operating Margins | 0.9% | 1.4% | 0.4% | 1.8% |
| Net Margins | 2.11% | 6.62% | -0.37% | 0.99% |
| Net Income (MM) | $12,187 | $49,405 | -$3,560 | $10,388 |
| Net Interest Expense (MM) | 1,061 | 1,628 | -1,213 | -2,106 |
| Net Interest Expense (MM) | $1,061 | $1,628 | -$1,213 | -$2,106 |
| Depreciation & Amort. (MM) | -$5,828 | -$6,068 | -$6,232 | -$7,236 |
| Earnings Per Share | $8.22 | $31.68 | -$2.3 | $1.66 |
| EPS Growth | n/a | 285.4% | -107.26% | 172.17% |
| Diluted Shares (MM) | 1,484 | 1,555 | 1,554 | 428 |
| Free Cash Flow (MM) | $21,266 | $34,874 | $23,735 | $35,839 |
| Capital Expenditures (MM) | -$3,515 | -$7,670 | -$18,566 | -$21,980 |
| Net Current Assets (MM) | -$20,005 | $34,133 | $49,949 | $29,947 |
| Current Ratio | 0.99 | 1.35 | 1.35 | 1.32 |
| Long Term Debt (MM) | $10,052 | $12,531 | $9,386 | $30,233 |
| Net Debt / EBITDA | -1.14 | -1.11 | -8.72 | -1.2 |
JD.com has growing revenues and increasing reinvestment in the business, low leverage, and consistent free cash flow. However, JD.com has slimmer gross margins than its peers, weak operating margins with a positive growth rate, and declining EPS growth. Finally, we note that JD.com has just enough current assets to cover current liabilities.
