Regressive P/E — PDD Case Study .

Subject:

Regressive P/E — PDD Case Study

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This formula is only applicable to High ROA relative to CTAC & High NetROIC relative to CICC.

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This is because this Regressive P/E formula treats CTAC & CICC as the minimum achievable Profitabilities to gain rather than as Costs to lose.

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PDD FY2025

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Non-Gaap EPS = USD 10.3507581966

Non-Gaap NetROIC = 25.5305840264 %

Non-Gaap ROA = 17.03077631 %

CTAC = 8.5538486 %

CICC = 5.11587169 %

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The compound annual growth rate of PDD Holdings Inc's net income for the next 3 years is 16%.

https://www.alphaspread.com/security/nasdaq/pdd/analyst-estimates

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PDD FY2026 (12 Months)

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Estimated Non-Gaap EPS Growth, G

= 16 %

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Estimated Non-Gaap EPS

= 10.3507581966 × 1.16

= USD 12.006879508

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ROA, CTAC, NetROIC, CICC

— Retained the same as if FY2025 to avoid the more introduced guessings the more errors produced.

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(A)

PEG = 1 Valuation :

Estimated Deserved P/E FY2026

= G

= 16

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(B)

Regressive Valuation :

Estimated Regressive P/E FY2026

= Whichever the lowest

= ROA

= 17.03077631

or

= (NetROA×CTAC×NetROIC×CICC)^(1÷4)

= (17.03077631×8.5538486×25.5305840264×5.11587169)^(1÷4)

= 11.7447587211

or

= (G×√(CTAC×CICC)×ROA×CTAC×NetROIC×CICC)^(1÷6)

= (16×√(8.5538486×5.11587169)×17.03077631×8.5538486×25.5305840264×5.11587169)^(1÷6)

= 11.2375808717 ✅

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Estimated P FY2026 (Conservative Regressed)

= Non-Gaap EPS × Regressive P/E

= 12.0068795081 × 11.2375808717

= USD 134.928279489

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(C)

Forward P/E at USD 97.77 today

= 97.77 ÷ 12.0068795081

= 8.1428317769

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Actual Intrinsic P/E FY2026 > Estimated Regressive P/E 11.2375808717

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Actual Estimated Intrinsic Value FY2026 > Estimated Regressive P FY2026 USD 134.928279489

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Warning:

This formula do serves the purpose of regression.

But if the ROA, CTAC, NetROIC and CICC are very high and their Economic Spreads, ROA-CTAC & NetROIC-CICC are very small, the Outcome might be distorted, too large to be true, If that is the case, we should adopt the formula in the link below :