PDD HOLDINGS INC (NASDAQ:PDD) was identified as an affordable growth stock by our screening process. The company combines strong growth metrics with solid profitability and financial health, all while trading at a reasonable valuation. Here’s why PDD stands out.
Growth Prospects
PDD has demonstrated impressive growth, with revenue increasing by 59% over the past year and earnings per share (EPS) surging by 78.5%. Over the last several years, the company has maintained an average annual EPS growth of 106.5%, significantly outpacing many peers in the broadline retail sector. While future growth is expected to moderate, analysts still project a 13.5% annual revenue increase, indicating sustained expansion.
Valuation
Despite its strong performance, PDD remains reasonably priced. The stock trades at a P/E ratio of 10.24, well below both the industry average (29.26) and the S&P 500 (26.60). Its forward P/E of 9.47 further supports the case that the stock is undervalued relative to its growth potential. Additionally, PDD’s enterprise value to EBITDA ratio suggests it is cheaper than 83.9% of its industry peers.
Profitability & Financial Health
PDD excels in profitability, with a return on invested capital (ROIC) of 28.8% and an operating margin of 27.5%, ranking near the top of its sector. The company also maintains a strong balance sheet, with no debt and a current ratio of 2.21, indicating ample liquidity to meet short-term obligations.
For a deeper look at PDD’s fundamentals, review the full analysis report.
Our Affordable Growth screener lists more stocks with similar characteristics and is updated daily.
Disclaimer
This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own research before making investment decisions.
