JD.COM INC-ADR (NASDAQ:JD) – A GARP Candidate Worth Considering

JD.COM INC-ADR (NASDAQ:JD) surfaced in our Peter Lynch-inspired stock screen, which targets companies with steady growth, reasonable valuations, and strong financial health. The Chinese e-commerce giant fits the criteria for long-term investors seeking growth at a reasonable price (GARP). Below, we examine why JD stands out.

Why JD Fits the Peter Lynch Strategy

• Earnings Growth: JD’s 5-year EPS growth averages 26.75%, comfortably within Lynch’s preferred range of 15-30%. This indicates sustainable expansion rather than overheated growth.
• Attractive Valuation: With a PEG ratio of 0.24 (well below Lynch’s threshold of 1), JD’s earnings growth is priced conservatively. Its P/E of 6.48 is significantly lower than both industry peers and the S&P 500 average.
• Strong Profitability: The company’s return on equity (ROE) of 19.26% exceeds Lynch’s 15% benchmark, reflecting efficient use of shareholder capital.
• Healthy Balance Sheet: JD’s debt-to-equity ratio of 0.24 aligns with Lynch’s preference for low leverage, reducing financial risk.
• Liquidity: A current ratio of 1.26 suggests JD can comfortably meet short-term obligations, though industry comparisons show room for improvement.

Fundamental Highlights

JD’s financial health is solid, with improving profit margins and consistent cash flow generation. While its gross margin lags behind some competitors, recent trends show progress. The company’s valuation metrics, including price-to-free cash flow and forward P/E, suggest it remains undervalued relative to growth prospects.

For a deeper dive, review the full fundamental analysis report.

Our Peter Lynch Strategy screener lists more stocks meeting these criteria 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.