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Bear of the Day: JDcom (JD)

JD.com (JD) operates as an online direct sales company in China that offers a selection of authentic products. after the company reported earnings late last week. The companies offers a wide variety of products including appliances, phones, furniture, jewelry, toys, books, tickets, and even alcohol. The Beijing based company is now a Zacks Rank #5 (Strong Sell) after a Q4 EPS miss and a large debt offering.

The company has a market cap of $35 Billion and has negative EPS. The stock has Zacks Style Scores of “D” in Value and “F” in Growth, along with a “D” VGM score. The company falls in an industry ranked 180 out of 265 (Bottom 32%) of the Zacks Industry Rank.

Estimates and Earnings

Q4 earnings in early March came in at $-0.07 verse the $-0.02 expected. While revenue was a beat and enough to pop the stock to $30 a share, the stock has come all the way back and is looking weak after some falling estimate revisions and a debt offering. The chart below shows us that revisions for the current year have been to the downside. Over the last 60 days, estimates have come 22% lower for fiscal year 2016. 


Looking over the last couple quarter the stock and EPS reports have been volatile. Since its IPO in 2014 the company has missed just as much as its beaten, causing the stock to run between $38 and $22. Looking at the charts, we see a bearish trendline and support at $22. If the company misses EPS again on May 9th, id expect that $22 level to be tested again.
Debt Offering

On April 22 JD announced a debt offering of $1.0 Billion, which caused the stock to sell off over 10%. The company intends to use the funds from the offering for general corporate purposes.

A Better Option

Travelport Worldwide (TVPT) is Zacks Rank #1 (Strong Buy) and a better option than JD.com. The company is travel commerce platform providing distribution, technology, payment and other solutions for the global travel and tourism industry. Analysts have been revising estimates higher over the last 90 days, for both fiscal years 2016 and 2017. The stock dipped down under $9 share earlier in the year and no look to have stabilized over $13. The company has beaten on EPS four straight quarters and will look to do so again on May 5th.  

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