It's been a great afternoon session for JD.com investors, who saw their shares rise 7.3% to a price of $28.73 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
an Exceptionally Low P/B Ratio but Trading Above Its Fair Price:
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 22.06 and an average price to book (P/B) ratio of 3.18. In contrast, JD.com has a trailing 12 month P/E ratio of 13.2 and a P/B ratio of 0.2.
JD.com's PEG ratio is 23.58, 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.
Exceptional EPS Growth but an Average Current Ratio:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $67,198 | $82,865 | $114,299 | $149,326 | $151,690 | $152,771 |
| Operating Margins | -1% | 2% | 2% | 0% | 2% | 2% |
| Net Margins | -1% | 2% | 7% | 0% | 1% | 2% |
| Net Income (M) | -$407 | $1,708 | $7,561 | -$701 | $1,407 | $3,275 |
| Net Interest Expense (M) | $124 | $104 | $172 | $190 | $305 | $406 |
| Depreciation & Amort. (M) | $809 | $837 | $930 | $978 | $1,049 | $1,168 |
| Diluted Shares (M) | 2,878 | 2,967 | 3,109 | 3,107 | 3,181 | 3,171 |
| Earnings Per Share | -$0.13 | $0.59 | $2.43 | -$0.18 | $0.47 | $1.07 |
| EPS Growth | n/a | 553.85% | 311.86% | -107.41% | 361.11% | 127.66% |
| Avg. Price | $33.37 | $28.1 | $58.78 | $76.79 | $60.82 | $28.73 |
| P/E Ratio | -256.69 | 46.83 | 23.42 | -426.61 | 126.71 | 26.6 |
| Free Cash Flow (M) | $1,967 | $2,795 | $6,520 | $5,765 | $7,586 | $7,816 |
| CAPEX (M) | $1,070 | $764 | n/a | $873 | $797 | $567 |
| Current Ratio | 0.87 | 0.99 | 1.35 | 1.35 | 1.32 | 1.16 |
JD.com has exceptional EPS growth, generally positive cash flows, and rapidly growing revenues and decreasing reinvestment in the business. 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 1.16.
