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JD.com Q2 Earnings Preview: What’s Ahead?
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JD.com Q2 Earnings Preview: What’s Ahead?

Chinese e-commerce company JD.com Inc. (JD) is set to release second-quarter 2021 earnings on August 23.

Over the past year, shares of the company have lost around 16%, trading at slightly above $62.

As JD.com remains well-positioned to benefit from the growth of China’s huge e-commerce market, it is worth taking a look at this online retailer ahead of the results. Solid Q2 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.

Q2 Expectations

For Q2, the Street expects JD.com to report adjusted EPS of $0.32 and revenues of $38.65 billion. (See JD.com Dividend Date and History on TipRanks)

JD.com’s Prior Quarter Snapshot

JD.com posted better-than-expected results in the first quarter with both revenues and earnings topping the analysts’ expectations.

JD.com’s net revenues jumped 39% year-on-year to $31 billion (RMB203.2 billion) in Q1 and surpassed analysts’ expectations of $29.8 billion. Strength in both the services and products sectors contributed to the positive results.

Meanwhile, Non-GAAP diluted net income per ADS came in at RMB2.47 ($0.38), versus RMB1.98 in the same quarter last year. Analysts expected earnings of $0.35 per ADS.

What to Watch Out for in JD.com’s Earnings

JD.com generates revenues from three main reportable segments – retail, logistics, and new businesses.

Let’s look at how these segments are anticipated to perform this quarter.

The company’s retail segment, which comprises the e-commerce business, performed well in Q1. JD Retail’s revenue grew 35% year-over-year to RMB186 billion in Q1, driven by strong demand in the merchandise categories, namely supermarket, healthcare, home product, and cosmetics.

Notably, the establishment of flagship stores for popular fashion and luxury brands like Louis Vuitton, Zenith, and others on JD.com is likely to have boosted customer momentum, which will help retail segment performance in the upcoming quarter.

Let’s see what the management has to say about the retail segment.

While JD did not issue any formal financial guidance, the company remained upbeat about its retail operations in the long run.

Along those lines, JD stated at its first-quarter earnings call, “JD Retail, as the core business of JD.com, will continue to strive for high-end healthy growth in 2021 and serve as the cornerstone for JD.com’s overall development.”

Next is JD’s logistics segment, which provides supply chain and logistics solutions to businesses. Revenues increased 64% year-on-year to RMB22 billion in Q1.

In the logistics space, the company is making continuous efforts to invest in infrastructure and networks to extend its service offerings and growth potential.

Coming to the company’s new business segment, which includes JD Property, Jingxi, international business, JD Cloud, and Artificial Intelligence (AI), performed well in the past quarter. The company witnessed accelerated growth across the board from all sub-business lines during the quarter.

As a result, revenues jumped 56% year-on-year to RMB5 billion in Q1.

The trend is expected to have continued in the upcoming quarter, driven by the company’s strong product portfolio. Further, Jingxi, which focuses on lower-tier markets in China, has been gaining momentum and could help drive revenues in this segment.

To summarize, JD.com is expected to post solid earnings, but investors should focus on what the business says regarding the current regulatory uncertainty.

What Analysts are Saying About JD Stock

Ahead of the Q2 earnings release, Stifel Nicolaus analyst Scott Devitt reiterated a Buy rating on the stock and a price target of $85.00. This implies 36.7% upside potential to current levels.

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 9 Buys, 1 Hold, and 1 Sell. The average JD price target of $94.36 implies 51.7% upside potential from the current levels.

TipRanks data shows that financial blogger opinions are 97% Bullish on JD, compared to a sector average of 72%.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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