A strong performer from today's evening trading session is JD.com, whose shares rose 3.6% to $27.6 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.
An Exceptionally Low P/B ratio but Trades Above Its Graham Number:
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 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, JD.com has a trailing 12 month P/E ratio of 13.0 and a P/B ratio of 0.19.
JD.com's PEG ratio is 23.3, 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.
Low Leverage Levels and Exceptional EPS Growth:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $67,198 | $82,865 | $114,299 | $149,326 | $151,690 | $151,690 |
| Revenue Growth | n/a | 23.31% | 37.93% | 30.64% | 1.58% | 0.0% |
| Operating Margins | 0% | 2% | 7% | 5% | 2% | 2% |
| Net Margins | 0% | 2% | 43% | 33% | 7% | 7% |
| Net Income (MM) | -$2 | $1,750 | $49,248 | $49,248 | $10,210 | $10,210 |
| Net Interest Expense (MM) | $202 | $772 | $4,989 | $4,989 | $305 | $305 |
| Depreciation & Amort. (MM) | $3,533 | $4,673 | $5,037 | $5,037 | $5,295 | $5,295 |
| Earnings Per Share | -$0.01 | $0.59 | $2.43 | $2.43 | $0.47 | $0.47 |
| EPS Growth | n/a | 6000.0% | 311.86% | 0.0% | -80.66% | 0.0% |
| Diluted Shares (MM) | 2,911 | 2,967 | 3,109 | 3,109 | 3,181 | 3,181 |
| Free Cash Flow (MM) | $3,127 | $2,489 | $6,520 | $5,765 | $7,510 | $7,586 |
| Current Ratio | 0.97 | 0.99 | 1.35 | 1.35 | 1.32 | 1.32 |
| Total Debt (MM) | $2,928 | $2,474 | $3,364 | $5,213 | $11,203 | $12,288 |
| Net Debt / EBITDA | -0.69 | -0.43 | -0.77 | -0.62 | -0.03 | 0.1 |
JD.com has exceptional EPS growth and low leverage. Additionally, the company's financial statements display growing revenues and decreasing reinvestment in the business and irregular cash flows. However, the firm has weak operating margins with a positive growth rate.
