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JD.com Reports Q2 Earnings; Here’s Why the Stock Rallied

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JD.com reported solid earnings results in the second quarter despite the slowdown in the Chinese economy.

JD.com (JD) recently reported earnings for its second quarter of Fiscal Year 2022. Adjusted earnings per share came in at $0.61, which beat analysts’ consensus estimate of $0.41 per JD share. In the past nine quarters, the company has beaten estimates nine times.

In addition, sales increased 5.4% year-over-year, with revenue hitting $40 billion. The increase in sales was attributed to the growth in JD’s Retail and Logistics segments.

A good sign is that cost of revenues increased by 4.3%, which means that the company demonstrated operating leverage since it increased less than revenue growth. Indeed, the gross margin expanded from 12.5% to 13.4%. This, along with minimal changes to operating expenses, caused the company’s operating income to increase from $44.9 million in the comparable period to $561 million now.

JD Stock Has Negative Investor Sentiment

The sentiment among TipRanks investors is currently negative. Out of the 557,268 portfolios tracked by TipRanks, 1% hold JD. In addition, the average portfolio weighting allocated towards JD among those who do have a position is 4.03%. This suggests that investors of the company are fairly confident about its future.

However, in the last 30 days, 1.1% of those holding the stock decreased their positions. As a result, the stock’s sentiment is below the sector average, as demonstrated in the following image:

What is the Target Price for JD Stock?

JD.com has a Strong Buy consensus rating based on six Buys assigned in the past three months. The average JD stock price target of $85.83 implies 51.6% upside potential.

Takeaway – JD Stock Delivered Better-than-Expected Results

JD.com saw a solid quarter as it was able to grow revenue despite the slowdown in the Chinese economy, while adjusted earnings came in better than expected. As a result of its expanding margins and increasing profits, it’ll be interesting to see if sentiment surrounding JD stock improves going forward.

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