JD.com’s (JD) second-quarter earnings report has caused quite a stir, with its stock soaring by 6.4% following the announcement. The company reported net revenues of RMB291.4 billion (approximately US$40.1 billion), reflecting a modest 1.2% increase from the previous year and aligning closely with analysts’ consensus estimate of RMB291.47 billion. This uptick in revenue reflects JD.com’s solid market position amidst a competitive landscape.
JD’s Earnings Per Share (EPS) Skyrocket
JD.com’s earnings per share (EPS) showed a remarkable jump in the second quarter. Diluted net income per ADS surged by 97.3% to RMB8.19 (US$1.13), a significant leap from RMB4.15 in the same period last year. The company’s non-GAAP diluted EPS also saw a 73.7% rise to RMB9.36 (US$1.29), exceeding analysts’ consensus estimates of US$0.87. As Sandy Xu, JD.com’s CEO, put it, “Our steadfast efforts to strengthen supply chain capabilities and user experience continue to distinguish JD in China’s e-commerce industry.”
JD.com’s Profit Margins and Operating Income Shine
JD.com’s income from operations for Q2 reached RMB10.5 billion (US$1.4 billion), up from RMB8.3 billion last year. The non-GAAP income from operations also saw a significant boost, climbing to RMB11.6 billion (US$1.6 billion). This increase in operating income reflects the company’s improved gross margin, which jumped by 137 basis points to 15.8%. Ian Su Shan, CFO of JD.com, highlighted that “our gross margin substantially increased… contributing to our record-high operating and net profit on a non-GAAP basis.”
JD’s Share Repurchases Underline Confidence
In a show of confidence, JD.com repurchased 136.8 million Class A ordinary shares (equivalent to 68.4 million ADSs) for US$2.1 billion during the second quarter. This move, part of a larger US$3.0 billion share repurchase program, demonstrates the company’s commitment to boosting shareholder value and mitigating potential dilution from convertible senior notes issued earlier this year.
Is JD a Good Stock to Buy?
Analysts remain bullish about JD stock, with a consensus Strong Buy rating based on 13 Buys and three Holds. Over the past year, JD has decreased by more than 20%, and the average JD price target of $40.62 implies an upside potential of 49.7% from current levels. These analyst ratings are likely to change following JD’s results today.
