Consumer Spending To Drive JD.com To Report Inline Q2 Results

For an e-commerce company like JD.Com JD, consumer spending is a key factor to dictate its bottom line and the top line. The trend suggests the company might report in line results, which was also supported by Citi analyst Alicia Yap.

According to the tradingeconomics.com, the last actual consumer spending was 264,758 yuan. This would slacken a bit in the third quarter to 263,869 yuan before recovering to 269,982 yuan in the fourth quarter of the current year.

Similarly, consumer confidence improved to 102.90 points from 99.80 in the preceding period with the highest at 124.60 and the lowest at 97.00 points. On a year-over-year and month-over-month basis, retail sales witnessed 10.6 percent and 0.92 percent growth, respectively.

According to a Bloomberg report published on July 15, China growth was steady due to consumer thus dimming the prospect of any stimulus expectations. In the second quarter, GDP advanced 6.7 percent, which was better than the 6.6 percent expected by economists.

While these data provided a solid based for JD.com, how far the company was able to translate them into revenue remains to be seen. However, Alicia Yap sees the Chinese company reporting its second quarterly results mostly in line with the estimates.

Meanwhile, T.H. Capital downgraded the shares from a Buy to Hold. Citi kept a Buy rating though Yap reduced its price objective from $32 to $31.

Street analysts expect the company to suffer a wider net loss of $0.03 a share in the second quarter on revenue of $9.81 billion. Analysts' have boosted its predictions from $0.04 loss per share ninety days back.

At this point, JD.Com enjoys price-to-sales ratio of only one time for the trailing 12-month period, which was better than the 6.3 times enjoyed by the industry. Its revenue growth the three-year period was 63.6 percent compared to 28.8 percent.

The company is scheduled to report earnings before Wednesday's opening bell.