Is JD.com (JD) A Dirt Cheap Stock To Buy Now? A Deep Dive Into Its Undervalued Potential

JD.com (NASDAQ: JD), China’s second-largest e-commerce giant, has long been overshadowed by Alibaba (BABA), but recent financial metrics and strategic moves suggest it could be a hidden gem for value investors. With a trailing P/E of just 9.60 and a forward P/E of 7.51, JD trades at a fraction of its growth potential. Let’s dissect whether this stock is indeed “dirt cheap” and ripe for investment.

Valuation: A Bargain at Current Levels?

JD’s valuation metrics scream undervaluation. Its price-to-sales (P/S) ratio of 0.33 and price-to-book (P/B) ratio of 1.56 are historically low, especially compared to peers. . Analysts at Goldman Sachs estimate JD’s intrinsic value could be 48% higher than its current price, citing its dominant logistics network and improving margins.

The company’s net cash position of $19.76 billion ($13.61 per share) adds further support. With debt-to-equity at 0.29, JD is far less leveraged than many peers, offering a margin of safety. Meanwhile, its 5.76% shareholder yield (combining dividends and buybacks) rewards investors while management strategically shrinks the share count.

Financial Performance: Profitability Takes Center Stage

JD’s 2024 results were a masterclass in turning the corner. Fourth-quarter net income surged 190.8% year-over-year to $1.4 billion, driven by cost discipline and a 3.0% non-GAAP operating margin. Full-year net income jumped 71.1%, with margins expanding from 2.2% to 3.6%.

. This turnaround isn’t a fluke. JD Retail’s 14.7% revenue growth in Q4, paired with logistics’ steady expansion, highlights a diversified revenue stream. Even its “new businesses” segment, which saw a 31% revenue decline, is being pruned to focus on core strengths—a smart strategic move.

Strategic Leverage: Logistics & Ecosystem Synergy

JD’s crown jewel is its in-house logistics network, which now boasts same-day delivery in 90% of Chinese cities and plans to expand its global air freight capacity. This vertical integration keeps costs low and customer satisfaction high, a key differentiator from competitors reliant on third-party logistics.

The company is also doubling down on its PLUS membership program, which now offers lifestyle perks like car washes and home cleaning. With 30 million members, this program boosts retention and ARPU (average revenue per user). Meanwhile, JD Health’s rapid expansion into telemedicine and testing services taps into China’s aging population and healthcare demand.

Risks to Consider

No investment is without risks. JD faces intense competition from Alibaba and Pinduoduo, which are aggressively cutting prices. Geopolitical tensions and potential U.S.-China trade frictions could also disrupt its supply chain.

Moreover, short-term volatility persists. Shares dropped 7% in February 2025 amid concerns over rising costs, despite strong earnings. The stock’s beta of 0.54 suggests lower volatility than the market, but macroeconomic headwinds in China’s consumer sector remain a wildcard.

Conclusion: A Compelling Buy at Current Levels

The numbers don’t lie: JD.com is a deep-value play with catalysts for growth. Its $5.67 billion net income over the past 12 months, $32 billion in cash, and $46.67 average price target (implying a 32% upside) make it a compelling bet. Management’s shareholder-friendly actions—$3.6 billion in buybacks in 2024 and a $5 billion program through 2027—signal confidence.

While risks exist, JD’s fortress balance sheet and strategic focus on profitability and logistics dominance position it to outperform in China’s e-commerce recovery. For investors willing to look past short-term noise, JD could be the undervalued gem of 2025.

Final Take: Buy JD with a $35–$40 entry, set a $50 price target, and hold for the long term. The data-backed case for value is too strong to ignore.