Despite its growth, NASDAQ:PDD remains within the realm of affordability.

Last update: Apr 10, 2024

PDD HOLDINGS INC (NASDAQ:PDD) has caught the eye of our stock screener as an affordable growth stock. NASDAQ:PDD is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

Deciphering NASDAQ:PDD's Growth Rating

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:PDD has earned a 7 for growth:

The Earnings Per Share has grown by an impressive 68.74% over the past year.
PDD shows a strong growth in Revenue. In the last year, the Revenue has grown by 89.68%.
The Revenue has been growing by 79.96% on average over the past years. This is a very strong growth!
Based on estimates for the next years, PDD will show a very strong growth in Revenue. The Revenue will grow by 24.63% on average per year.

How We Gauge Valuation for NASDAQ:PDD

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NASDAQ:PDD boasts a 5 out of 10:

69.70% of the companies in the same industry are more expensive than PDD, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 26.26. PDD is valued slightly cheaper when compared to this.
PDD's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. PDD is cheaper than 63.64% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of PDD to the average of the S&P500 Index (22.55), we can say PDD is valued slightly cheaper.
Based on the Price/Free Cash Flow ratio, PDD is valued a bit cheaper than the industry average as 78.79% of the companies are valued more expensively.
The excellent profitability rating of PDD may justify a higher PE ratio.

Health Assessment of NASDAQ:PDD

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:PDD was assigned a score of 7 for health:

An Altman-Z score of 6.40 indicates that PDD is not in any danger for bankruptcy at the moment.
PDD has a Altman-Z score of 6.40. This is amongst the best in the industry. PDD outperforms 87.88% of its industry peers.
PDD has a debt to FCF ratio of 0.06. This is a very positive value and a sign of high solvency as it would only need 0.06 years to pay back of all of its debts.
PDD's Debt to FCF ratio of 0.06 is amongst the best of the industry. PDD outperforms 93.94% of its industry peers.
PDD has a Debt/Equity ratio of 0.03. This is a healthy value indicating a solid balance between debt and equity.
With a decent Debt to Equity ratio value of 0.03, PDD is doing good in the industry, outperforming 78.79% of the companies in the same industry.
PDD has a Current ratio of 1.93. This is in the better half of the industry: PDD outperforms 63.64% of its industry peers.
With a decent Quick ratio value of 1.93, PDD is doing good in the industry, outperforming 75.76% of the companies in the same industry.

Looking at the Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:PDD scores a 8 out of 10:

PDD has a Return On Assets of 17.25%. This is amongst the best in the industry. PDD outperforms 96.97% of its industry peers.
PDD has a Return On Equity of 32.06%. This is amongst the best in the industry. PDD outperforms 87.88% of its industry peers.
With an excellent Return On Invested Capital value of 25.64%, PDD belongs to the best of the industry, outperforming 96.97% of the companies in the same industry.
PDD had an Average Return On Invested Capital over the past 3 years of 17.97%. This is significantly above the industry average of 11.22%.
The 3 year average ROIC (17.97%) for PDD is below the current ROIC(25.64%), indicating increased profibility in the last year.
PDD's Profit Margin of 24.24% is amongst the best of the industry. PDD outperforms 96.97% of its industry peers.
PDD has a better Operating Margin (23.70%) than 100.00% of its industry peers.
With an excellent Gross Margin value of 62.96%, PDD belongs to the best of the industry, outperforming 84.85% of the companies in the same industry.

More Affordable Growth stocks can be found in our Affordable Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of PDD

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.