Shares of Chinese e-commerce company JD.com (JD +0.13%) rallied 21.1% in March, according to data from S&P Global Market Intelligence.
The Chinese retailer reported fourth-quarter earnings that, while perhaps not that impressive on a stand-alone basis, did handily beat analyst estimates. With JD's stock trading at a very low single-digit price-to-earnings (PE) ratio, it didn't take much to get the stock moving higher.
NASDAQ: JD
Key Data Points
JD.com beats expectations and raises its dividend
In the fourth quarter, JD.com reported 3.6% revenue growth to $43.1 billion, and adjusted earnings per American depositary share (ADS) of $0.75, which handily beat analyst estimates.
Besides the earnings beat, JD noted it would reauthorize its $3 billion share repurchase program, which will last through 2027. And the company also declared an annual dividend of $0.76, a 23% increase over the $0.62 annual dividend last year. After paying a larger special dividend in 2022, it has paid a regular annual dividend each of the last two years.
JD.com has a few different units, which are important to tease out to perhaps get a sense of the company's trajectory. In the fourth quarter, product sales grew 3.7%, while advertising revenue on the marketplace actually fell 4%, but logistics and other revenue jumped 8.1%.
In truth, this doesn't seem like a particularly great performance, especially the advertising revenue declines. And while the overall company saw an expansion in adjusted net profit margin from 2.6% to 2.7%, the core retail segment saw operating margins fall from 3% to 2.6% amid price competition.
But given the downturn and price wars in the Chinese e-commerce space, as well as the country essentially being in recession, it was perhaps better than expected. And with the stock only trading at 8.7 times this year's earnings estimates, it was enough to lift JD's shares last month.
JD is no longer a growth stock, but a value
JD is obviously no longer the hot growth stock it was, largely because the Chinese economy itself has also turned into a lower-growth economy, with questions about the government's heavy hand in its private sector. Moreover, the country's property bust appears to have led to a consumer recession of sorts.
That being said, for those who believe things will get incrementally better for U.S.-China relations or China's economy generally, JD and other Chinese tech peers look quite cheap, trading around levels of the 2018 downturn. That being said, if things don't improve in China's relationship with the rest of the world, these stocks could be stuck for a while.
