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JD.com: What’s Your Competitive Advantage?

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  • JD.com had a productive year so far, but their performance is still average in their competitive industry.
  • A global company with such potential should have higher revenue.
  • Is JD a quality long-term investment for you?

JD (JD.com Inc., $33.16) is China’s second largest e-commerce retail website and as affordable, the stock price is, many investors are anxious for better financial results.

Fast Analysis

JD has a history of low GPM (gross profit margins) ranging from 11% to 14% from 2014 to 2017. Leading corporations that have a higher competitive advantage may have a percentage that lies in 20% or above such as BABA (Alibaba Group Holdings) at 57% and AMZN (Amazon.com Inc.) at 23%.

Investors are also mindful of JD’s earnings history. Limited or erratic growth in earnings may be a sign of the company’s poor management of supply- also known as “boom and bust”.

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Though investors do not solely use GPM’s or earnings as a sole deal-breaker for investing, a company that shows consistent growth in these areas is a positive sign of long-term durability.

Read: Honda VS. Toyota- Which Stock Is The Better Buy?

Recent Acquisitions, Mergers & Investments

JD had a busy summer with the large partnership made with GOOGL (Google/Alphabet) and acquisition of a large european fashion brand, Finish Line.

JD also partnered with L. Catterton Asia for a convertible note investment of $175 million in SECO (Secoo Holding Limited), one of the world’s leading online luxury brand. This joint venture was made to further expand revenue and audience in the online retail market.

Related: Alibaba Group Holdings Ltd: The International Powerhouse

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On the other hand, analysts such as Zack’s are currently listing JD as a “strong sell” due to the low annualized return rate below 5%.

Should investors wait until the trade dispute subsides between Asia and the United States? JD is taking immediate action through the right investments to broaden their audience.

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Information Attainted:

Nasdaq.com, Zacks.com, Msn.com/Money, CNBC.com

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