JD

Considering an Investment in JD.com (JD)? Read This!

JD.com shares fell by -3.9% during the day's afternoon session, and are now trading at a price of $33.41. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

an Exceptionally Low P/B Ratio but Priced Beyond Its Margin of Safety:

JD.com, Inc. operates as a supply chain-based technology and service provider 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 15.0 and a P/B ratio of 0.23.

JD.com's PEG ratio is 29.55, 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.

Strong Revenue Growth but an Average Current Ratio:

2017 2018 2019 2020 2021 2022
Revenue (M) $4,689 $67,198 $82,865 $114,299 $149,326 $151,690
Operating Margins -3% -1% 2% 2% 0% 2%
Net Margins 0% -1% 2% 7% 0% 1%
Net Income (M) -$2 -$407 $1,708 $7,561 -$701 $1,407
Net Interest Expense (M) $148 $124 $104 $172 $190 $305
Depreciation & Amort. (M) $644 $809 $837 $930 $978 $1,049
Diluted Shares (M) 2,911 2,878 2,967 3,109 3,107 3,181
Earnings Per Share -$0.01 -$0.13 $0.59 $2.43 -$0.18 $0.47
EPS Growth n/a -1200.0% 553.85% 311.86% -107.41% 361.11%
Avg. Price $39.57 $33.37 $28.1 $58.78 $76.79 $60.82
P/E Ratio -3957.0 -256.69 46.83 23.42 -426.61 126.71
Free Cash Flow (M) $3,313 $1,967 $2,795 $6,520 $5,765 $7,586
CAPEX (M) $502 $1,070 $764 n/a $873 $797
Current Ratio 0.97 0.87 0.99 1.35 1.35 1.32

JD.com has rapidly growing revenues and a flat capital expenditure trend, exceptional EPS growth, and positive cash flows. Furthermore, JD.com has weak operating margins with a positive growth rate and just enough current assets to cover current liabilities, as shown by its current ratio of 1.32.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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