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For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $40.12 billion, indicating growth of 1.03% from the year-ago quarter’s reported figure.
The consensus mark for earnings is pinned at 86 cents per share, suggesting 16.2% growth from the prior-year quarter’s reported number. The figure has been revised 6.2% upward over the past 30 days.
Image Source: Zacks Investment Research
JD.com has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 23.81%. Its earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.89%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for JD.com this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
JD.com’s strong momentum across the JD Retail segment is expected to have been the key growth driver in the second quarter.
A wide range of product categories, including electronics products, home appliances and a large variety of other general merchandise categories, is anticipated to have sustained the company’s customer momentum.
Growing relationships with third-party merchants, who are continuously introducing products like premium international brands, are likely to have boosted customer engagement on JD.com’s marketplace platform.
The increasing number of flagship stores on JD’s platform is likely to have benefited the segment.
JD.com’s partnership with French luxury fashion group SMCP, whose brands like SANDRO, MAJE and CLAUDIE PIERLOT opened flagship stores on JD’s platform, is anticipated to have continued aiding the performance of the JD Retail segment in the quarter under review.
Strong momentum with the JD Procurement and Sales Manager Livestreaming initiative is likely to have contributed well.
Strengthening omnichannel offerings of JD are also expected to get reflected in its quarterly results. The company’s strategic partnership with Dada, which has tie-ups with a large number of well-known chain retailers and many first-tier international and domestic FMCG brands, is expected to have been beneficial.
Growing momentum across 7FRESH and JD MALL is likely to have been another positive.
In addition to retail efforts, the impacts of the rising momentum of JD Health on the heels of 24/7 free online medical consultation and online pharmacy retail services are expected to get reflected in the company’s to-be-reported quarter’s results. The growing digital capabilities of JD Health are likely to have contributed well.
Solid momentum across JD Logistics on the back of the growing network of domestic and overseas warehouses and transportation is expected to have contributed well.
The company’s expanding quick delivery services in the lower-tier cities are likely to have helped it gain traction in these cities in the second quarter. The strengthening of the logistics network in these cities is anticipated to have contributed to the quarter’s performance.
However, softness in the new businesses segment is expected to have negatively impacted top-line growth in the quarter under review.
JD’s mounting fulfillment expenses, including procurement, warehousing, delivery, customer service and payment processing expenses, are likely to have weighed on its second-quarter performance.
Price Performance & Valuation
JD.com’s shares have lost 9.8% on a year-to-date basis against the industry, the Zacks Retail-Wholesale sector and the S&P 500 index’s rallies of 6.8%, 6% and 12.2%, respectively.
JD has also underperformed its peers — Alibaba (BABA - Free Report) and PDD Holdings (PDD - Free Report) . While BABA has gained 4.4%, PDD has lost 2.6% year to date.
YTD chart
Image Source: Zacks Investment Research
Now, let us look at the value that JD.com offers to its investors at current levels.
Currently, JD is trading at a discount with a forward 12-month P/E of 7.35X compared with the industry’s 23.03X, reflecting a good investment opportunity.
Investment Thesis
JD.com’s growing momentum in its retail business, owing to improving relationships with third-party merchants, digital marketing services, omni-channel efforts and logistics services, is expected to benefit its long-term prospects. The company’s strategic investments and a deepening focus on the innovation of products and services with the power of advanced technologies are playing a vital role in shaping its growth trajectory.
However, weak market conditions in China continue to act as a headwind. Declining export volumes do not bode well for China-based e-commerce companies. High inflation and geo-political tensions are other headwinds.
JD.com faces stiff competition from China’s e-commerce giant Alibaba, which does not bode well for its market position.
Also, its mounting expenses are expected to keep profits under pressure.
These factors make the near-term prospects of JD foggy.
Conclusion
Given the combination of risks and rewards, existing shareholders are advised to hold their positions, whereas prospective investors should closely monitor the company’s key developments instead of rushing in to buy the stock.
Image: Bigstock
JD.com's (JD) Pre-Q2 Earnings Analysis: Should You Buy or Hold?
JD.com, Inc. (JD - Free Report) is slated to report second-quarter 2024 results on Aug 15.
For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $40.12 billion, indicating growth of 1.03% from the year-ago quarter’s reported figure.
The consensus mark for earnings is pinned at 86 cents per share, suggesting 16.2% growth from the prior-year quarter’s reported number. The figure has been revised 6.2% upward over the past 30 days.
Image Source: Zacks Investment Research
JD.com has an impressive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 23.81%. Its earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.89%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for JD.com this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
JD has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Focus Ahead of Q2 Earnings
JD.com’s strong momentum across the JD Retail segment is expected to have been the key growth driver in the second quarter.
A wide range of product categories, including electronics products, home appliances and a large variety of other general merchandise categories, is anticipated to have sustained the company’s customer momentum.
Growing relationships with third-party merchants, who are continuously introducing products like premium international brands, are likely to have boosted customer engagement on JD.com’s marketplace platform.
The increasing number of flagship stores on JD’s platform is likely to have benefited the segment.
JD.com’s partnership with French luxury fashion group SMCP, whose brands like SANDRO, MAJE and CLAUDIE PIERLOT opened flagship stores on JD’s platform, is anticipated to have continued aiding the performance of the JD Retail segment in the quarter under review.
Strong momentum with the JD Procurement and Sales Manager Livestreaming initiative is likely to have contributed well.
Strengthening omnichannel offerings of JD are also expected to get reflected in its quarterly results. The company’s strategic partnership with Dada, which has tie-ups with a large number of well-known chain retailers and many first-tier international and domestic FMCG brands, is expected to have been beneficial.
Growing momentum across 7FRESH and JD MALL is likely to have been another positive.
In addition to retail efforts, the impacts of the rising momentum of JD Health on the heels of 24/7 free online medical consultation and online pharmacy retail services are expected to get reflected in the company’s to-be-reported quarter’s results. The growing digital capabilities of JD Health are likely to have contributed well.
Solid momentum across JD Logistics on the back of the growing network of domestic and overseas warehouses and transportation is expected to have contributed well.
The company’s expanding quick delivery services in the lower-tier cities are likely to have helped it gain traction in these cities in the second quarter. The strengthening of the logistics network in these cities is anticipated to have contributed to the quarter’s performance.
However, softness in the new businesses segment is expected to have negatively impacted top-line growth in the quarter under review.
JD’s mounting fulfillment expenses, including procurement, warehousing, delivery, customer service and payment processing expenses, are likely to have weighed on its second-quarter performance.
Price Performance & Valuation
JD.com’s shares have lost 9.8% on a year-to-date basis against the industry, the Zacks Retail-Wholesale sector and the S&P 500 index’s rallies of 6.8%, 6% and 12.2%, respectively.
JD has also underperformed its peers — Alibaba (BABA - Free Report) and PDD Holdings (PDD - Free Report) . While BABA has gained 4.4%, PDD has lost 2.6% year to date.
YTD chart
Image Source: Zacks Investment Research
Now, let us look at the value that JD.com offers to its investors at current levels.
Currently, JD is trading at a discount with a forward 12-month P/E of 7.35X compared with the industry’s 23.03X, reflecting a good investment opportunity.
Investment Thesis
JD.com’s growing momentum in its retail business, owing to improving relationships with third-party merchants, digital marketing services, omni-channel efforts and logistics services, is expected to benefit its long-term prospects. The company’s strategic investments and a deepening focus on the innovation of products and services with the power of advanced technologies are playing a vital role in shaping its growth trajectory.
However, weak market conditions in China continue to act as a headwind. Declining export volumes do not bode well for China-based e-commerce companies. High inflation and geo-political tensions are other headwinds.
JD.com faces stiff competition from China’s e-commerce giant Alibaba, which does not bode well for its market position.
Also, its mounting expenses are expected to keep profits under pressure.
These factors make the near-term prospects of JD foggy.
Conclusion
Given the combination of risks and rewards, existing shareholders are advised to hold their positions, whereas prospective investors should closely monitor the company’s key developments instead of rushing in to buy the stock.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.