JD.com (JD) fell 6.1% on May 3 to close at $28.27. This drop in stock price means JD.com stock is currently trading 47% above its 52-week low of $19.27 and 38% below its 52-week high of $45.23. The stock might drop further after Trump’s announcement that he will increase tariffs on Chinese goods worth $200 billion. JD.com has fallen close to 20% in the last 12 months driven by trade war concerns and management issues.
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Even though the stock has recovered this year and gained 44% in 2019, President Trump’s comments might impact the stock negatively. Concerns over China’s growth and debt levels might also impact the stock going forward.
However, the sales and earnings forecast remains strong, and the stock might be a solid bet for long-term gains especially if it can stay free of controversy and trade war issues are sorted out.
Is JD.com trading at an attractive valuation?
JD.com is trading at a forward PE multiple of 51x for 2019 and at 29.1x for 2020. In comparison, the company’s earnings are estimated to rise 66% in 2019 and 60.3% in 2020, which suggests that the stock is grossly undervalued. JD.com is valued at 0.53x sales.
Out of 37 analysts covering JD.com, 32 recommend a “buy,” and four recommend a “hold.” There is one “sell” recommendation. The average 12-month price target for JD.com is $30.18, indicating the stock is trading at a discount of 7% to average estimates.