JD Stock Trading at Discount of 23.0% to Average Estimates


Jun. 7 2019, Updated 9:50 a.m. ET

JD.com stock returns

Chinese (FXI) online retailer JD.com (JD) has been pummeled over the last 18 months. The stock has lost over 40.0% since the start of 2018. Though the stock has gained 25.4% in 2019, it has lost 13.0% in market value since April this year. In fact, JD.com stock has declined 13.3% since May 2019.

Though JD.com has been impacted by the ongoing trade war and a slowing domestic economy, its growth story is far from over. In the first quarter, JD.com reported sales of $18 billion, a rise of 21% year-over-year. Adjusted earnings rose a whopping 215.0% to $0.33 per share. Wall Street expected JD.com to post sales of $17.74 billion with EPS of $0.12 in the first quarter. The company’s stock rose over 10.0% on May 10 (the day it announced Q1 results) but has pulled back significantly due to the escalation of the trade war.

JD.com is slated to benefit from China’s growing e-commerce market, which is estimated to grow by 30.0% in 2019. JD.com, also known as China’s Amazon, has a 25.0% share in China’s e-commerce market.

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PE multiple

JD.com stock is currently trading at a forward PE multiple of 26.2x. In comparison, analysts estimate its earnings per share will grow 88.6% in fiscal 2019 and by 51.5% in fiscal 2020, indicating that the stock is grossly undervalued considering the PE multiple.

How do analysts view JD.com?

Out of the 37 analysts covering JD.com, 32 recommend a “buy” and four recommend a “hold.” There is one “sell” recommendation. The analysts have an average 12-month stock price target of $32.28 for JD.com, indicating the stock has an upside potential of 23.0% from its current price.


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