Why JD.com (JD) Stock is Soaring Today
NEW YORK (TheStreet) -- Shares of JD.com (JD) - Get Report are gaining by 4% to $29.80 in aftrenoon trading on Tuesday, as some U.S. traded China-based stocks get a boost from the rally in China's stocks and as the Chinese government sets a goal for a 6.5% economic growth over the next five years.
JD.com is a Beijing-based online direct sales company that is primarily engaged in the sale of electronics and home goods in China.
Chinese stocks gained for the first time in six days in Hong Kong trading, Bloomberg reports as global equities monitored gains in U.S. shares. This comes after equities regained all of their losses from the surprise devaluation of the yuan in August.
The Hang Seng Enterprises Index was higher by 0.4% to 10,283.42 at the close today, ceasing a five-day 4.7% losing streak.
Additionally, China's President Xi Jinping and the Communist Party have set a 6.5% target for the country's annual economic growth between 2016 and 2020, the New York Times reports.
Separately, TheStreet Ratings team rates JD.COM INC -ADR as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate JD.COM INC -ADR (JD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JD's very impressive revenue growth exceeded the industry average of 45.7%. Since the same quarter one year prior, revenues leaped by 60.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- JD's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Compared to other companies in the Internet & Catalog Retail industry and the overall market, JD.COM INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 12.3% when compared to the same quarter one year prior, going from -$93.90 million to -$82.33 million.
- The gross profit margin for JD.COM INC -ADR is currently extremely low, coming in at 6.36%. Regardless of JD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.11% trails the industry average.
- You can view the full analysis from the report here: JD