Should you buy or sell JD.com shares after outperforming Q3 Street expectations?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 18, 2021
  • JD.com shares on Thursday surged more than 5% after announcing its most recent quarterly results.
  • The company released its fiscal third-quarter revenue and earnings before markets opened, beating estimates.
  • President Lei Xu lauded JD’s technological competencies and unique business model for the Q3 beat.

On Thursday, JD.com Inc. (HKG:09618) shares rocketed more than 5% after announcing its most recent quarterly results. The company released its fiscal third-quarter revenue and earnings before markets opened, beating the consensus for analyst expectations.

JD.com President Lei Xu attributed the impressive quarterly performance to the company’s technological competencies and unique business model.

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JD posted fiscal third-quarter non-GAAP earnings per share of $0.49, outperforming the consensus for analyst estimates of $0.32. On the other hand, its GAAP EPS of -$0.28 fell short of the consensus Street forecast of $0.16, while revenue for the quarter increased by 25.5% from the same quarter in 2020 to $33.9 billion, surpassing expectations by $360 million.

JD.com shares are up just 1.85% this year despite spiking by more than 40% since the 19th of August. Therefore, there is more room left to run going into the tail-end of the year.

JD looks like a strong buy

From an investment perspective, JD.com shares trade at a compelling forward P/E ratio of just 6.59, making the stock an attractive option for bargain hunters.

In addition, analysts expect its earnings per share to spike by 287% this year before increasing by a further 51% next year.

Therefore, JD.com could also be an attractive option for long-term growth investors.

Source – TradingView

Technically, JD.com shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied closer to the overbought conditions of the 14-day RSI.

However, with shares yet to retest the trendline resistance, investors could target extended gains at about $92.54, or higher at $97.99, while $83.58 and $78.02 are support levels.

The bull-run seems poised to continue

In summary, although JD.com shares have recently spiked to move closer to overbought conditions, the stock still trades at exciting valuation multiples whilst offering solid growth prospects.

Therefore, it may not be too late to buy JD.com shares ahead of the recovery.

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