JD.com: Big Buyback Could Ramp Up Growth

Core Viewpoint - JD.com is positioned as a leading e-commerce company in China, focusing on quality and inventory management, which results in lower profit margins compared to competitors like Alibaba and PDD Holdings. Despite this, JD shows strong growth potential and is currently undervalued in the market [2][3][13]. Financial Metrics - JD's adjusted P/E ratio is 8.4, GAAP P/E is 12.2, price/sales ratio is 0.28, and price/book ratio is 1.33, indicating it is the cheapest among its peers [2]. - JD's year-over-year earnings growth rate is 130%, with a revenue growth of 4.98% in the trailing 12 months [7][8]. Buyback Program - JD has initiated a significant buyback program, repurchasing $1.2 billion worth of stock in the first quarter, which could retire approximately 3% of its shares annually. If the pace continues, JD could retire 12% of its shares this year, enhancing earnings per share [3][13]. Global Expansion - JD is shifting its focus towards global markets, recently expressing interest in acquiring the UK delivery company Evri and launching JD Global Sales. The company is also providing logistics services for MINISO in Australia and Malaysia, indicating a strategic move to enhance its international presence [4][6]. Domestic Economic Factors - China's economic recovery is a positive catalyst for JD, with expectations of exceeding a 5% growth target and online retail sales growing at 12.4%. This environment is conducive to JD's business growth [6][13]. Growth and Profitability - JD has a long-term growth trend with a 17.9% CAGR in revenue and a 50% CAGR in net income over five years. The company scores an A+ on profitability metrics, with an 8.85% gross margin and an 11.5% return on equity [8][9][11]. Valuation - JD is considered one of the cheapest tech stocks globally, with a discounted cash flow analysis suggesting a price target of $40.10, indicating a 49.5% upside from current prices [12][13].