JD.com Vs. Sea Ltd: Which E-Commerce Stock Is A Better Buy?

Profitability

JD’s trailing-12-month revenue is 28.39 times SE’s. However, SE is more profitable with a gross margin of 30.1% versus JD’s 8.2%.

JD’s ROE and ROA of 21.29% and 2.20%, respectively, compare favorably with SE’s negative values.

Valuation

In terms of forward P/E, JD is currently trading at 52.74x, which is much more expensive than SE. However, SE is more expensive in terms of trailing-12-month P/S (JD - Get Rating), and its trailing-12-month EV/S of 24.90x is also higher than JD’s 1.22x.

In terms of trailing-12-month price/cash flow as well, SE’s 264.60x is higher than JD’s 24.32x.

Though SE looks much more expensive compared to JD, it’ may be worth paying this premium considering SE’s higher earnings growth potential.

POWR Ratings

Both JD and SE are rated “Strong Buy” in our proprietary POWR Ratings system. Here are how the four components of overall POWR Rating are graded for both these stocks:

JD has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade, and “B” for Industry Rank. It is currently ranked #2 out of 115 stocks in the China industry.

SE holds an “A” for Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. It is currently ranked #6 out of 59 stocks in the Internet industry.

The Winner

Both JD and SE are good investment bets considering their market dominance and continued expansion. However, SE appears to be a better buy despite trading at a significantly higher valuation based on its higher revenue growth potential.

SE shares were trading at $200.68 per share on Friday afternoon, up $17.15 (+9.34%). Year-to-date, SE has gained 398.96%, versus a 16.29% rise in the benchmark S&P 500 index during the same period.

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