Can JD.com (JD) Q3 Earnings Gain From Solid New Businesses?
JD.com, Inc. JD is set to report third-quarter 2020 results on Nov 16.
The company’s strong momentum across its New Businesses segment, which comprises logistics services, technology services and overseas businesses, is likely to have contributed well to the third-quarter results.
We note that the segment has been delivering a solid performance for quite some time on the back of the company’s progress made in advanced technologies, logistics and the real estate.
We believe, this trend is likely to have continued in the to-be-reported quarter as well owing tothe company’s deepenedfocus on the lower-tier cities and itsgrowing technology initiatives.
Click here to know how the company’s overall third-quarter performance is likely to be.
JD.com, Inc. Price and EPS Surprise
JD.com, Inc. price-eps-surprise | JD.com, Inc. Quote
Factors at Play
The company’s constant focus on enhancing its fast delivery services is expected to get reflected in the to-be-reported quarter’s results.
Moreover, its expanding 24-hour delivery service in the lower-tier cities is likely to have aided JD Logistics in gaining traction from these cities during the third quarter. Also, strengthening of logistics network in these cities is anticipated to have contributed to the September quarter’s performance.
Further, JD.com’s growing warehouse network is expected to have benefited its New Business segment during the third quarter. The launch of Asia’s No.1 warehouse in Langfang, Hebei province is one-of-its kind as it is equipped with automated storage and retrieval system for bulky items. This too might have acted as a tailwind for the company.
Notably, the company’s rising technology initiatives are expected to have boosted the segment’s user momentum and operational efficiency in the third quarter.
The integration of Artificial Intelligence technology into the company’swarehouse network is anticipated to have continued accelerating the delivery of direct sales orders services during the quarter under review.
Additionally, the robust momentum across third-party logistics and advertising revenues is expected to have driven the company’s logistics and other services revenues.This, in turn, is likely to have driven the third-quarternet services revenues.
Zacks Rank & Key Picks
JD.com currently carries a Zacks Rank #3 (Hold).
Dollar General Corporation DG, Target Corporation TGT and The Kroger Co. KR are some better-ranked stocks in the broader Retail-Wholesale sector, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Long-term earnings growth rate for Dollar General, Target and Kroger is pegged at 11.09%, 7.22% and 6.2%, respectively.
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