The rapid expansion of e-commerce platforms is reshaping the global retail landscape. With consumer behavior shifting toward online shopping, companies have invested heavily in digital infrastructure, seamless payment options, and faster delivery networks.
Given the industry’s robust prospects, investors could consider watching fundamentally sound e-commerce stocks PDD Holdings Inc. (PDD), Sea Limited (SE), and Etsy, Inc. (ETSY) to their watchlist.
According to the Census Bureau of the Department of Commerce reports, the U.S. retail e-commerce sales for the third quarter increased 2.6% year-over-year, amounting to $300.10 billion. In 2024, the global online shoppers are a total of 2.71 billion, and is estimated to increase in 2025 to 2.77 billion shoppers.
The competitive landscape has led to innovative strategies, including personalized recommendations powered by AI and the integration of omnichannel models. Major platforms are leveraging data analytics to enhance user experience and improve operational efficiency. This has allowed even smaller retailers to gain visibility, boosting their sales and market presence.
The global e-commerce market is anticipated to reach $6.45 trillion by 2029, exhibiting a CAGR of 9.5%. Also, with the increasing adoption of digital wallets and seamless cross-border shipping options, e-commerce platforms are poised to dominate retail.
Considering these conducive trends, let’s examine the fundamentals of the three e-commerce stocks.
PDD Holdings Inc. (PDD)
Headquartered in Dublin, Ireland, PDD is a multinational commerce group that owns and operates a portfolio of businesses. It operates Pinduoduo, an e-commerce platform offering products like agricultural produce, apparel, shoes, bags, mother and childcare products, and food and beverage, and also operates Temu, an online marketplace.
In terms of the trailing-12-month net income margin, PDD’s 29.10% is 565.1% higher than the 4.55% industry average. Similarly, its 49.15% trailing-12-month ROCE is 350.7% higher than the industry average of 10.90%. Also, its trailing-12-month ROTA of 23.19% compares to the industry average of 3.89%.
For the fiscal third quarter that ended September 30, 2024, PDD’s revenues increased 44.3% year-over-year to $14.16 billion. Its non-GAAP operating profit grew 47.7% from the year-ago value to $3.81 billion. The company’s non-GAAP net income attributable and non-GAAP earnings per share came in at $3.91 billion and $0.66, up 61.3% and 60.3% from the prior year’s quarter, respectively.
Street expects PDD’s revenue for the fiscal fourth quarter (ending December 2024) to increase 29.7% year-over-year to $16.02 billion. Moreover, its EPS estimate of $2.67 for the same period indicates an 11.2% year-over-year growth. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters, which is promising.
PDD shares have surged 3% over the past three months to close the last trading session at $98.80.
PDD’s stance is apparent in its POWR Ratings. The stock has an A grade for Quality and a B for Momentum. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 43 stocks in the A-rated China industry, it is ranked #26. Click here to see the additional PDD ratings (Growth, Value, Stability, and Sentiment).
Sea Limited (SE)
Based in Singapore, SE engages internationally in digital entertainment, e-commerce, and digital financial service businesses. The company provides a Garena digital entertainment platform to access online games, eSports operations, and other entertainment content, as well as a Shopee e-commerce platform for integrated payment and logistics infrastructure and seller services.
The stock’s trailing-12-month asset turnover ratio of 0.78x is 58.5% above the industry average of 0.49x.
During the fiscal third quarter that ended on September 30, 2024, SE’s revenue increased 30.8% year-over-year, amounting to $4.33 billion. Its gross profit amounted to $82.89 million, increasing 29.1% year-over-year. Its operating income came in at $202.42 million compared to the year-ago net loss of $127.74 million.
In addition, the company’s net income stood at $153.32 million compared to the prior-year quarter’s loss of $143.98 million, while its EPS came in at $0.24 versus a loss of $0.26 per share last year. Also, the total adjusted EBITDA rose significantly from the prior year’s quarter to $521.34 million.
Analysts expect SE’s revenue for the third quarter ended October 31, 2024, to increase 27.2% year-over-year to $4.60 billion, while its EPS for the same period is expected to grow significantly from the prior-year quarter to $0.70. The company surpassed Street revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 208.8% over the past year and 185.7% year-to-date to close the last trading session at $115.71.
SE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It also has an A grade for Growth and Sentiment and a B for Momentum and Quality. Within the A-rated Internet industry, it is ranked #19 out of 52 stocks. Click here to see SE’s ratings for Value and Stability.
Etsy, Inc. (ETSY)
ETSY operates two-sided online marketplaces that connect buyers and sellers around the world. Its primary marketplace is Etsy.com, which connects artisans and entrepreneurs with various consumers.
ETSY's trailing-12-month net income margin and ROTA of 9.17% and 10.51% are 111.1% and 170.5% higher than their respective industry averages of 4.35% and 3.89%. Likewise, its trailing-12-month asset turnover ratio of 1.14x compares favorably to the industry average of 0.99x.
ETSY’s revenues for the third quarter (ended September 30, 2024) increased 4.1% year-over-year to $662.41 million. It reported gross profit of $476.77 million, up 6.5% year-over-year. The company’s net income came in at $57.37 million and $0.45 per share. Also, its adjusted EBITDA increased marginally year-over-year, amounting to $183.59 million.
The consensus revenue estimate of $862.71 million for the fiscal fourth quarter (ending December 2024) represents a 2.4% increase year-over-year. The consensus EPS estimate of $1.51 for the current quarter indicates a 24.3% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus revenue estimate in three of the trailing four quarters.
Over the past month, the stock has surged 11.7%, closing the last trading session at $54.31.
ETSY’s fundamentals are reflected in its POWR Ratings. The stock has an A grade for Quality and a B for Momentum. It is ranked #33 out of 52 stocks in the Internet industry.
Beyond what is stated above, we’ve also rated ETSY for Growth, Value, Stability, and Sentiment. Get all ETSY’s ratings here.
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PDD shares were trading at $98.80 per share on Thursday afternoon, down $0.51 (-0.51%). Year-to-date, PDD has declined -32.47%, versus a 27.18% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
