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JD.com (JD) Q4 Earnings to Gain From New Businesses Strength

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JD.com, Inc. JD is set to report fourth-quarter 2019 results on Mar 2.

The company’s New Businesses segment, which comprises of logistics services, technology services and overseas businesses, is likely to have benefited the fourth-quarter performance.

Moreover, JD.com has been investing heavily in advanced technologies, logistics and real estate, with the aim of expanding its logistics presence over the past few years. This has been helping the company gain traction in the rapidly growing logistics and delivery market

Notably, the segment has been delivering strong performance for quite some time on the back of the above-mentioned strong endeavors.

In the third quarter, the segment generated RMB 5.9 billion revenues, which improved 61.9% from the year-ago quarter. This was primarily driven by the company’s strengthening logistics services.

We believe the trend is likely to have continued in the to-be-reported quarter on the back of its deepening focus on lower-tier cities and growing technology initiatives.

Click here to know how the company’s overall fourth-quarter performance is likely to be.

JD.com, Inc. Revenue (TTM)

JD.com, Inc. Revenue (TTM)

JD.com, Inc. revenue-ttm | JD.com, Inc. Quote

Factors at Play

JD.com’s strengthening momentum across third-party logistics and advertising revenues is expected to have driven the company’s logistics and other services revenues. This, in turn, is likely to have driven the fourth-quarter net services revenues.

Moreover, expanding 24-hour delivery service in the lower-tier cities is likely to have helped JD Logistics in gaining traction in these cities during the to-be-reported quarter. Also, strengthening logistics network in these cities is anticipated to have contributed to the fourth-quarter performance.

Further, the company’s constant focus toward enhancing its fast delivery services is expected to get reflected in the to-be-reported quarter’s performance.

Flash Delivery initiative, which offers delivery times ranging from several minutes to about one hour for selected merchandise, is expected to have aided the company in delivering better user experience during the quarter under review.

This, in turn, is likely to have bolstered the company’s external orders growth, which is expected to have contributed to the JD Logistics fourth-quarter performance.

Additionally, expanding external order volume is expected to have aided JD.com’s economies of scale in the soon-to-be-reported quarter.

Further, growing technology initiatives of the company is expected to have aided the segment’s user momentum and operational efficiency in the fourth quarter.

Notably, the integration of Artificial Intelligence technology into its warehouse network is anticipated to have continued accelerating the delivery of the company’s direct sales orders services during the quarter under review.

However, macroeconomic headwinds in the China are likely to get reflected in the fourth-quarter results.

Zacks Rank & Key Picks

JD.com currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the retail-wholesale sector are Stamps.com STMP, eBay EBAY and Fiverr International (FVRR - Free Report) . While Stamps.com and eBay sport a Zacks Rank #1 (Strong Buy), Fiverr carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Stamps.com, eBay and Fiverr is currently pegged at 15%, 11.25% and 44.18%, respectively.

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