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JD.com (JD - Free Report) is a Zacks Rank #1 (Strong Buy) that operates as an online direct sales company in China. The company offers a diverse range of products, from electronics to food.
Unlike many Chinese related stocks, JD has held up well in 2022 and is down just slightly year to date. One reason for the relative strength is a stretch of earnings beats that stretches back to 2019.
With the market recently gaining some traction, investors are looking at stocks like JD that have held up well. Let’s take a look at the bullish case for JD as we head into the back half of the year.
About the Company
JD was incorporated in 2006 and is headquartered in Beijing, China. It employs 385,000 people and has a market cap of $80 Billion.
Trough its website and mobile applications, JD offers a selection of products including home appliances, clothing, luxury goods, jewelry, household products, personal care items, food, books, media products, toys, fitness equipment and virtual goods.
The stock has Zacks Style Scores of “A” in Growth as well as Momentum, and sports a “B” in Value. JD has a Forward PE of 28 and pays no dividend.
Q2 Earnings Beat
In late August, JD reported a 32% EPS beat for Q2. The company also beat on the top line and saw its EBITDA margin go from 1.5% last year to 2.7%.
Management commented that they are pleased with the topline growth considering the challenging period. They added that the premium membership program of JD.com has exceeded the milestone of 30 million registered members in July 2022, setting a new record in scale.
The stock reacted very well to the earnings report, moving from the $55 area to and august high of $67.87 in just four days. The stock has pulled back since that up move, but rising estimates should keep any future selling at bay.
Analyst Estimates
Over the last 30 days, estimates have been trending higher across all time frames. For the current quarter, we have seen numbers taken from $0.55 to $0.62 or 13%. For next quarter, they have ticked 13% higher over that same time frame.
Looking down the road, analysts see the momentum continuing. Over the last 60 days, the current year has seen estimates go from $1.86 to $2.15, or 11%. For next year, analysts have taken numbers 3% higher.
Analyst are also taking price targets above current trading levels. Susquehanna reiterated JD with a Neutral after earnings, lifting their targets to $62 from $55. Benchmark reiterated JD with their Buy rating and price target of $109.
The Technicals
The stock made highs early in 2021 at $107. After that high, the stock dropped 62% to bottom around the $40 level. JD has bounced 50% from that low made back in March and has traded sideways around the $60 area.
Now down 10% on the year, investors are looking for those post-earnings highs above $67 to get green on the year.
Looking at the moving averages, the stock is above the 50-day at $60.50, but below the 200-day at $63.25. If the bulls want some momentum higher in price, that 200-day must be taken back.
If the bulls get a breakout above that area, they should watch for the $73-75 spot for profit taking. This was the resistance back in February, which likely brings in some sellers.
The bulls can lean on the $54 level, which was the pre-earnings lows and the 61.8% retracement drawn from May lows to June highs.
Bottom Line
The bulls have seen some relative strength in JD.com, something that has been rare for a Chinese stock in 2022.
Investors should be watching this name for a potential breakout over the 200-day moving average. Traders have a nice setup above the 50-day MA at $60.50 and with the 61.8% support area at $54.
If the overall market can gain traction, the bulls should expect the stock to get 2022 highs before the year is over.
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Bull of the Day: JD.com (JD)
JD.com (JD - Free Report) is a Zacks Rank #1 (Strong Buy) that operates as an online direct sales company in China. The company offers a diverse range of products, from electronics to food.
Unlike many Chinese related stocks, JD has held up well in 2022 and is down just slightly year to date. One reason for the relative strength is a stretch of earnings beats that stretches back to 2019.
With the market recently gaining some traction, investors are looking at stocks like JD that have held up well. Let’s take a look at the bullish case for JD as we head into the back half of the year.
About the Company
JD was incorporated in 2006 and is headquartered in Beijing, China. It employs 385,000 people and has a market cap of $80 Billion.
Trough its website and mobile applications, JD offers a selection of products including home appliances, clothing, luxury goods, jewelry, household products, personal care items, food, books, media products, toys, fitness equipment and virtual goods.
The stock has Zacks Style Scores of “A” in Growth as well as Momentum, and sports a “B” in Value. JD has a Forward PE of 28 and pays no dividend.
Q2 Earnings Beat
In late August, JD reported a 32% EPS beat for Q2. The company also beat on the top line and saw its EBITDA margin go from 1.5% last year to 2.7%.
Management commented that they are pleased with the topline growth considering the challenging period. They added that the premium membership program of JD.com has exceeded the milestone of 30 million registered members in July 2022, setting a new record in scale.
The stock reacted very well to the earnings report, moving from the $55 area to and august high of $67.87 in just four days. The stock has pulled back since that up move, but rising estimates should keep any future selling at bay.
Analyst Estimates
Over the last 30 days, estimates have been trending higher across all time frames. For the current quarter, we have seen numbers taken from $0.55 to $0.62 or 13%. For next quarter, they have ticked 13% higher over that same time frame.
Looking down the road, analysts see the momentum continuing. Over the last 60 days, the current year has seen estimates go from $1.86 to $2.15, or 11%. For next year, analysts have taken numbers 3% higher.
Analyst are also taking price targets above current trading levels. Susquehanna reiterated JD with a Neutral after earnings, lifting their targets to $62 from $55. Benchmark reiterated JD with their Buy rating and price target of $109.
The Technicals
The stock made highs early in 2021 at $107. After that high, the stock dropped 62% to bottom around the $40 level. JD has bounced 50% from that low made back in March and has traded sideways around the $60 area.
Now down 10% on the year, investors are looking for those post-earnings highs above $67 to get green on the year.
Looking at the moving averages, the stock is above the 50-day at $60.50, but below the 200-day at $63.25. If the bulls want some momentum higher in price, that 200-day must be taken back.
If the bulls get a breakout above that area, they should watch for the $73-75 spot for profit taking. This was the resistance back in February, which likely brings in some sellers.
The bulls can lean on the $54 level, which was the pre-earnings lows and the 61.8% retracement drawn from May lows to June highs.
Bottom Line
The bulls have seen some relative strength in JD.com, something that has been rare for a Chinese stock in 2022.
Investors should be watching this name for a potential breakout over the 200-day moving average. Traders have a nice setup above the 50-day MA at $60.50 and with the 61.8% support area at $54.
If the overall market can gain traction, the bulls should expect the stock to get 2022 highs before the year is over.