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Bull of the Day:, Inc. (JD)

Read MoreHide Full Article (JD - Free Report) is a Chinese e-commerce firm that has diversified into new areas and seen its stock price outclimb local rival Alibaba (BABA - Free Report) and Amazon (AMZN - Free Report) over the last two years.

The company is poised to expand and benefit from the ongoing expansion of digital commerce in the world’s second-largest economy. And JD has cooled off a bit recently, which might set up a more attractive buying opportunity.

Way Beyond E-Commerce sells everything from smartphones and computers to clothing and food. The company also operates travel services, sells industrial products, and much more. JD might best be described as a mixture of Costco (COST - Free Report) , Amazon, and Alibaba all rolled into one.

JD is one of the country’s biggest Internet companies by revenue, which is no easy task, and is one of its largest overall retailers. This means its offerings extend far beyond traditional e-commerce. JD runs successful logistics and fulfillment businesses and it offers a variety of other services, which includes consumer targeting, marketing, analytics, financing, and more.

JD also has a budding healthcare division that features pharmaceutical and healthcare products and services. The company currently offers online medical and psychological consultations, healthcare management services, and has Covid-19 focused services.












Other Fundamentals

Like Amazon, JD aims to touch nearly every aspect of life in China. And investors should remember that the growing Chinese middle-class should help the firm grow for years to come.

McKinsey estimates that China’s middle class could hit 550 million by 2022, which is far larger than the entire U.S. population of roughly 330 million. “We are also pleased to see an accelerating increase in user engagement, demonstrating our strengthened brand image and expanded consumer mindshare… We will continue to invest in technology and customer experience to support our future growth,” CFO Sidney Huang said in Q1 remarks.

The company closed the first quarter with over 387 million annual active customers, up 25%, while its mobile daily active users surged by 46%. The firm, like many retailers around the world such as Walmart (WMT - Free Report) , benefited from the coronavirus-induced stay-at-home push, with Q1 revenue up 21%, driven by 38% climb in general merchandise products.

It’s also worth pointing out that Tencent (TCEHY - Free Report) and Walmart are some of JD’s more notable investors. The company also went public in Hong Kong in mid-June, as more Chinese firms, including NetEase (NTES - Free Report) and Alibaba, have started to secure a secondary listing closer to home—which comes as tensions grow between the U.S. and China.

JD hit the Nasdaq in 2014 and is up over 200% since then. The stock saw initial success, but it really started to take off in the fourth quarter of 2018 and is now up 200% since January 2019, which crushed AMZN’s 100% run and BABA’s 85% climb during this stretch.













JD shares are up 80% in 2020. Investors might also find the roughly $63 per share price rather appealing. The stock also rests about 8% off its recent highs, with it tentatively expected to report its Q2 results on August 11.

JD has also consistently traded at a big discount against the e-commerce market at 0.8X forward 12-month sales vs. 4.6X and its peer group’s 3.7X—this group includes eBay (EBAY - Free Report) , BABA, Amazon, and others.


Our Zacks estimates call for JD’s second quarter revenue to jump 24%, with Q3 expected to come in 26.5% higher. These would both mark stronger growth than the first quarter. Its overall full-year 2020 revenue is projected to jump 22% higher, with FY21 expected to come in 19.3% stronger.

JD’s adjusted Q2 earnings are projected to pop 18% from the year-ago period to come in at $0.39 per share. Peeking further ahead, its adjusted fiscal 2020 EPS figure is projected to climb 20% to $1.25 per share, with FY21 set to jump another 60%.

All of these bottom-line expansion estimates would stand in impressive contrast to the broader earnings hit that the S&P 500 is expected to take this year. The nearby chart also showcases JD’s strong earnings revisions activity, with FY20 up 76% over the last 90 days.













Bottom Line

JD’s positive earnings revision activity helps it earn a Zacks Rank #1 (Strong Buy) right now, alongside its “B” grade for Value in our Style Scores system.

Investors might want to take a chance on this Chinese tech-focused retailer that’s got Amazon-style expansion on the mind, but comes at a far cheaper price point and a more enticing valuation.

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