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JD.com Declines 8.7% YTD: Is it Worth Buying the Stock Right Now?
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JD.com (JD - Free Report) has seen its stock price decrease 8.7% in the year-to-date period, underperforming the Zacks Internet-Commerce industry, the broader retail sector and the S&P 500 index’s growth of 10.7%, 11.3% and 17.2%, respectively, in the same time frame.
The decline comes amid broader market volatility and certain challenges being faced by China. The reduced export volume in the country is weighing heavily on the company’s business prospects.
Sluggish consumer discretionary spending, mounting operational expenses and the significant capital expenditure required to stay competitive in the e-commerce market are factors to consider. The company faces stiff competition from the likes of Alibaba (BABA - Free Report) and PDD Holdings (PDD - Free Report) in the China e-commerce market.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Given the extent of the pullback, some investors might see this as an opportunity to buy JD.com shares at a discount. But is now the right time to jump in? Let us take a closer look.
E-commerce Strength Boosts JD’s Prospects
JD.com’s strength in its e-commerce business model remains a major positive. A wide range of product categories, including electronics products, home appliances and a large variety of other general merchandise categories, are boosting customer engagement on its online retail platform.
Solid momentum in JD Retail on the back of growing relationships with third-party merchants, who are continuously introducing products like premium international brands, is a plus.
The increasing number of flagship stores on JD’s platform is aiding the performance of the JD Retail 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 noteworthy.
Strengthening momentum in JD’s logistics operations on the back of an expanding fulfillment network is contributing well to its e-commerce business growth. The company’s nationwide fulfillment infrastructure supports its e-commerce business well by delivering an enhanced shopping experience through speedy, efficient and reliable fulfillment services.
The company’s majority-owned subsidiary, Dada, which is a local on-demand retail and delivery platform in China, in cooperation with JD Logistics, provides customers with on-demand and last-mile delivery services for a wide selection of grocery and other fresh products through JD Daojia.
JD.com’s supply-chain-based technology and services manage upstream manufacturing and procurement, logistics, distribution, and retail to end customers.
The company has developed robust supply-chain-based technology in three key areas, namely AI, big data analytics and cloud computing, with the help of which it built a smart supply-chain platform that includes application-level products supporting many use cases that are applicable to its business and ecosystem.
With the help of these, the company enjoys strong relationships with several suppliers, brands and partners.
JD.com’s strong omni-channel initiatives are other positives. Its 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, bodes well.
The company is also making strides in the offline fresh food market on the back of its 7FRESH, which is part of its omni-channel strategy.
The opening of JD MALL, which is an offline store that offers omni-channel shopping experiences, is noteworthy. JD MALL provides more than 200,000 items from above 200 brands in categories such as home, furniture, kids, smart healthcare products and auto accessories. It also stocks electronic products.
Upward Estimate Revision is a Tailwind for JD
JD.com’s long-term prospects are expected to benefit from the increasing momentum in its e-commerce business, owing to the growing relationships with third-party merchants, digital marketing services and logistics services. Its omni-channel initiatives, strategic investments and a deepening focus on the innovation of products and services with the power of advanced technologies are playing vital roles in shaping its growth trajectory.
The Zacks Consensus Estimate for 2024 revenues is pegged at $157.16 billion, indicating year-over-year growth of 3.3%.
The consensus mark for 2024 earnings is pegged at $3.97 per share, suggesting year-over-year growth of 27.2%. The figure has moved north by 16.8% over the past 30 days.
Image Source: Zacks Investment Research
JD Stock is Undervalued
JD.com’s current valuation presents a compelling opportunity.
JD is trading at a discount with a forward 12-month Price/Sales of 0.26X compared with the industry’s 1.73X. This reflects a strong entry point for the investors.
Image Source: Zacks Investment Research
Final Thoughts: Buy the Dip
JD.com’s decline presents a potentially attractive buying opportunity for investors who believe in the long-term growth story. The company’s e-commerce strength, expanding logistics operations, cheap valuation and rising estimates make it a compelling investment.
Image: Bigstock
JD.com Declines 8.7% YTD: Is it Worth Buying the Stock Right Now?
JD.com (JD - Free Report) has seen its stock price decrease 8.7% in the year-to-date period, underperforming the Zacks Internet-Commerce industry, the broader retail sector and the S&P 500 index’s growth of 10.7%, 11.3% and 17.2%, respectively, in the same time frame.
The decline comes amid broader market volatility and certain challenges being faced by China. The reduced export volume in the country is weighing heavily on the company’s business prospects.
Sluggish consumer discretionary spending, mounting operational expenses and the significant capital expenditure required to stay competitive in the e-commerce market are factors to consider. The company faces stiff competition from the likes of Alibaba (BABA - Free Report) and PDD Holdings (PDD - Free Report) in the China e-commerce market.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Given the extent of the pullback, some investors might see this as an opportunity to buy JD.com shares at a discount. But is now the right time to jump in? Let us take a closer look.
E-commerce Strength Boosts JD’s Prospects
JD.com’s strength in its e-commerce business model remains a major positive. A wide range of product categories, including electronics products, home appliances and a large variety of other general merchandise categories, are boosting customer engagement on its online retail platform.
Solid momentum in JD Retail on the back of growing relationships with third-party merchants, who are continuously introducing products like premium international brands, is a plus.
The increasing number of flagship stores on JD’s platform is aiding the performance of the JD Retail 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 noteworthy.
Strengthening momentum in JD’s logistics operations on the back of an expanding fulfillment network is contributing well to its e-commerce business growth. The company’s nationwide fulfillment infrastructure supports its e-commerce business well by delivering an enhanced shopping experience through speedy, efficient and reliable fulfillment services.
The company’s majority-owned subsidiary, Dada, which is a local on-demand retail and delivery platform in China, in cooperation with JD Logistics, provides customers with on-demand and last-mile delivery services for a wide selection of grocery and other fresh products through JD Daojia.
JD.com’s supply-chain-based technology and services manage upstream manufacturing and procurement, logistics, distribution, and retail to end customers.
The company has developed robust supply-chain-based technology in three key areas, namely AI, big data analytics and cloud computing, with the help of which it built a smart supply-chain platform that includes application-level products supporting many use cases that are applicable to its business and ecosystem.
With the help of these, the company enjoys strong relationships with several suppliers, brands and partners.
JD.com’s strong omni-channel initiatives are other positives. Its 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, bodes well.
The company is also making strides in the offline fresh food market on the back of its 7FRESH, which is part of its omni-channel strategy.
The opening of JD MALL, which is an offline store that offers omni-channel shopping experiences, is noteworthy. JD MALL provides more than 200,000 items from above 200 brands in categories such as home, furniture, kids, smart healthcare products and auto accessories. It also stocks electronic products.
Upward Estimate Revision is a Tailwind for JD
JD.com’s long-term prospects are expected to benefit from the increasing momentum in its e-commerce business, owing to the growing relationships with third-party merchants, digital marketing services and logistics services. Its omni-channel initiatives, strategic investments and a deepening focus on the innovation of products and services with the power of advanced technologies are playing vital roles in shaping its growth trajectory.
The Zacks Consensus Estimate for 2024 revenues is pegged at $157.16 billion, indicating year-over-year growth of 3.3%.
The consensus mark for 2024 earnings is pegged at $3.97 per share, suggesting year-over-year growth of 27.2%. The figure has moved north by 16.8% over the past 30 days.
Image Source: Zacks Investment Research
JD Stock is Undervalued
JD.com’s current valuation presents a compelling opportunity.
JD is trading at a discount with a forward 12-month Price/Sales of 0.26X compared with the industry’s 1.73X. This reflects a strong entry point for the investors.
Image Source: Zacks Investment Research
Final Thoughts: Buy the Dip
JD.com’s decline presents a potentially attractive buying opportunity for investors who believe in the long-term growth story. The company’s e-commerce strength, expanding logistics operations, cheap valuation and rising estimates make it a compelling investment.
With a Zacks Rank #1 (Strong Buy) and a Growth Score of A, JD appears to offer solid investment potential. You can see the complete list of today’s Zacks #1 Rank stocks here.