Stock fell this week after a stellar run in 2019
JD.com (JD) has declined 10.5% this week. Since the start of May, JD.com is down 11.2%. Last year, JD.com fell close to 52% on trade war concerns coupled with management issues. JD.com stock had an impressive start to 2019 and is up 28.5% despite the recent weakness.
JD.com stock is also expected to be volatile in the short term due to the ongoing trade war. According to a Bloomberg report, a $200 billion increase of tariffs on China’s products would result in a 0.5 percentage-point decrease for the country’s GDP. A fall in GDP would directly impact consumer spending and hit the top line of Chinese companies.
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Wall Street analysts now need to revise earnings and sales estimates for companies having significant exposure to China’s markets.
Is JD.com undervalued after recent price declines?
Wall Street expects JD.com’s sales to grow by 18.6% to $81.33 billion in 2019 and increase 16.5% to $94.75 billion in 2020. JD.com’s earnings per share are estimated to rise by 65.7% in 2019 and 58.6% in 2020. JD.com stock is currently trading at a forward PE multiple of 45.3x for 2019, and the stock looks undervalued considering this multiple.
No one can predict how the trade war will pan out. JD.com is a large-cap company with a strong balance sheet and robust growth. JD.com’s strong fundamentals make it an attractive pick at the dips.