Temu parent company PDD Holdings (PDD) reported third-quarter earnings that came in well above what analysts were expecting, sending shares more than 18% higher Tuesday morning.
The Chinese holding company is known primarily for its fast-fashion brand Temu, which is quickly becoming a household name. It’s previously been compared to Shein, a foreign discount clothing retailer that’s also taken the fashion world by storm.
These days, though, Temu is being more closely compared to the likes of Alibaba – where consumers can shop for much more than just clothing. Vice President Jun Liu says that the high-quality development strategy the company has employed dramatically increased user mindshare in the third quarter.
The earnings reflected this growth as revenue nearly doubled with a 94% growth year over year. The figure of RMB68.8 billion was well north of the forecasted RMB55.2 billion.
Profitability surged in the third quarter as well. The company reported a net income of RMB15.5 billion (RMB10.60 per American depositary share) compared to this time last year when the company posted a net income of RMB10.6 billion (RMB7.34 per ADS).
The adjusted earnings per share of RMB11.61 outperformed the analyst consensus of just RMB8.94.
While most retail brands have felt consumer spending cinch in the last quarter, Co-Chief Executive Jiazhen Zhao says his company experienced the opposite – “consumption vitality kept improving”.
This news has bolstered the trajectory of PDD, which is now up 54% over the past few months and more than 86% in the past year. So, is this your sign to buy PDD if you don’t hold shares already?
We’ve taken a look through the VectorVest stock analysis software and found 3 things you need to consider before you decide whether or not to add this stock to your portfolio…
Despite Poor Upside Potential, PDD Has Good Safety and Excellent Timing
VectorVest transforms your trading strategy for the better, empowering you to win more trades with less work. It’s all based on a proprietary stock rating system that tells you what to buy, when to buy it, and when to sell it.
You’re given all the insights you need in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation.
But, it gets better. You’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for PDD, here’s what you need to see:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection) to AAA corporate bond rates and risk. It offers far superior insights than a simple comparison of price to value alone. As for PDD, the RV rating of 0.83 is considered poor.
- Good Safety: The RS rating is an indicator of risk. It comes from a deep analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, price volatility, sales volume, and other factors. PDD has a good RS rating of 1.12 right now.
- Excellent Timing: There’s no ignoring the strong positive price trend that has pushed PDD higher and higher over the past year. The stock has an excellent RT rating of 1.66, which is based on the direction, dynamics, and magnitude of its price movement. The rating is taken day over day, week over week, quarter over quarter, and year over year to paint the full picture for investors.
The overall VST rating of 1.29 is very good for PDD, and enough to earn the stock a BUY recommendation in the VectorVest system. Learn more by getting a stock analysis free today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. PDD is up 18% so far this morning after reporting incredible 3rd quarter earnings that outperformed both the top and bottom line. The stock has poor upside potential but good safety and excellent timing right now.
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