JD.COM INC-ADR (NASDAQ:JD) – A Strong Candidate for GARP Investors

JD.COM INC-ADR (NASDAQ:JD) emerged from our Peter Lynch-inspired stock screen as a potential fit for long-term investors seeking growth at a reasonable price (GARP). The company combines solid earnings growth, strong profitability, and a conservative financial structure—all while trading at an attractive valuation. Below, we examine why JD stands out.

Key Strengths

• Earnings Growth: JD has delivered an impressive 5-year average EPS growth of 26.75%, well within Lynch’s preferred range of 15-30%. This suggests sustainable expansion rather than overheated growth.
• Reasonable Valuation: The stock’s PEG ratio (0.82) is below 1, indicating it is priced attractively relative to its earnings growth. Additionally, its P/E ratio of 5.5 is significantly lower than both industry and S&P 500 averages.
• Strong Profitability: With a return on equity (ROE) of 19.26%, JD outperforms 74% of its peers in the broadline retail sector.
• Healthy Balance Sheet: The company maintains a low debt-to-equity ratio of 0.24, aligning with Lynch’s preference for financially stable businesses.
• Positive Cash Flow: JD has generated positive operating cash flow for five consecutive years, reinforcing its financial resilience.

Fundamental Overview

Our fundamental analysis rates JD a 6 out of 10, reflecting a balanced mix of strengths and weaknesses. While its gross margins are below industry averages, the company compensates with strong profitability metrics and an undervalued stock price. Recent improvements in return on invested capital (ROIC) also suggest better capital efficiency.

For a deeper dive, review the full fundamental report on JD.

Our Peter Lynch Strategy screener lists more stocks that fit this strategy and is updated regularly.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.