NEW YORK (TheStreet) -- Shares of Beijing-based JD.com (JD) - Get JD.com, Inc. (JD) Report are down by 2.60% to $24.88 in late morning trading on Wednesday, after China's factory sector declined at its fastest rate in six-and-a-half years in September.
The preliminary Caixin/Markit China Manufacturing Purchasing Managers Index released today showed worsening business conditions in China, and declining output, prices and jobs amid decreased demand, according to Reuters.
However, the weaker data was somewhat expected because Chinese factories were likely closed earlier this month for World War II anniversary celebrations, The Wall Street Journal reports.
The data followed the trend of manufacturing declines in China, with September's reading of 47 only slightly lower than August's reading of 47.3, The Journal adds.
The Shanghai Composite Index closed down by 2.2% on Wednesday following the data, as Asian stocks marked their largest intra-day loss in a month today, Reuters reports.
JD.com is an online direct sales company.
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 growth in earnings per share. 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 33.9%. 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.
- After a year of stock price fluctuations, the net result is that JD's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- 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