Stock Analysis: Affordable Growth

Fundamental Rating

PDD gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 31 industry peers in the Broadline Retail industry. PDD has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. PDD is growing strongly while it is still valued neutral. This is a good combination! This makes PDD very considerable for growth and quality investing!

1. Profitability

1.1 Basic Checks

In the past year PDD was profitable.

PDD had positive earnings in 4 of the past 5 years.

PDD had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

PDD's Return On Assets of 22.26% is amongst the best of the industry. PDD outperforms 96.77% of its industry peers.

PDD's Return On Equity of 35.89% is amongst the best of the industry. PDD outperforms 90.32% of its industry peers.

PDD has a better Return On Invested Capital (28.81%) than 96.77% of its industry peers.

The Average Return On Invested Capital over the past 3 years for PDD is significantly above the industry average of 11.80%.

The 3 year average ROIC (25.13%) for PDD is below the current ROIC(28.81%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	22.26%
ROE	35.89%
ROIC	28.81%

ROA(3y)17.6%

ROA(5y)10.52%

ROE(3y)31.57%

ROE(5y)18.63%

ROIC(3y)25.13%

ROIC(5y)N/A

1.3 Margins

PDD has a Profit Margin of 28.55%. This is amongst the best in the industry. PDD outperforms 100.00% of its industry peers.

In the last couple of years the Profit Margin of PDD has grown nicely.

PDD has a better Operating Margin (27.53%) than 100.00% of its industry peers.

PDD's Operating Margin has improved in the last couple of years.

PDD has a Gross Margin of 60.92%. This is amongst the best in the industry. PDD outperforms 83.87% of its industry peers.

In the last couple of years the Gross Margin of PDD has declined.

		Industry Rank	Sector Rank
OM	27.53%
PM (TTM)	28.55%
GM	60.92%

OM growth 3Y55.36%

OM growth 5YN/A

PM growth 3Y51.14%

PM growth 5YN/A

GM growth 3Y-2.75%

GM growth 5Y-5.06%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), PDD is creating value.

Compared to 1 year ago, PDD has more shares outstanding

PDD has more shares outstanding than it did 5 years ago.

The debt/assets ratio for PDD has been reduced compared to a year ago.

2.2 Solvency

PDD has an Altman-Z score of 6.13. This indicates that PDD is financially healthy and has little risk of bankruptcy at the moment.

The Altman-Z score of PDD (6.13) is better than 87.10% of its industry peers.

There is no outstanding debt for PDD. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	N/A
Altman-Z	6.13

ROIC/WACC3.76

WACC7.66%

2.3 Liquidity

PDD has a Current Ratio of 2.21. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.

PDD has a better Current ratio (2.21) than 80.65% of its industry peers.

PDD has a Quick Ratio of 2.21. This indicates that PDD is financially healthy and has no problem in meeting its short term obligations.

PDD's Quick ratio of 2.21 is amongst the best of the industry. PDD outperforms 93.55% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.21
Quick Ratio	2.21

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

PDD shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 78.54%, which is quite impressive.

The Earnings Per Share has been growing by 106.51% on average over the past years. This is a very strong growth

The Revenue has grown by 59.04% in the past year. This is a very strong growth!

Measured over the past years, PDD shows a very strong growth in Revenue. The Revenue has been growing by 67.20% on average per year.

EPS 1Y (TTM)78.54%

EPS 3Y106.51%

EPS 5YN/A

EPS Q2Q%16.34%

Revenue 1Y (TTM)59.04%

Revenue growth 3Y61.24%

Revenue growth 5Y67.2%

Sales Q2Q%24.45%

3.2 Future

Based on estimates for the next years, PDD will show a small growth in Earnings Per Share. The EPS will grow by 5.36% on average per year.

Based on estimates for the next years, PDD will show a quite strong growth in Revenue. The Revenue will grow by 13.52% on average per year.

EPS Next Y8.25%

EPS Next 2Y14.69%

EPS Next 3Y15.35%

EPS Next 5Y5.36%

Revenue Next Year19.16%

Revenue Next 2Y18.96%

Revenue Next 3Y17.3%

Revenue Next 5Y13.52%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

PDD is valuated reasonably with a Price/Earnings ratio of 9.82.

80.65% of the companies in the same industry are more expensive than PDD, based on the Price/Earnings ratio.

Compared to an average S&P500 Price/Earnings ratio of 28.10, PDD is valued rather cheaply.

A Price/Forward Earnings ratio of 9.07 indicates a reasonable valuation of PDD.

Compared to the rest of the industry, the Price/Forward Earnings ratio of PDD indicates a rather cheap valuation: PDD is cheaper than 83.87% of the companies listed in the same industry.

PDD's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 20.74.