DiDi Global (OTCPK:DIDI.Y): Assessing Valuation Following Strong Q3 Financials and Major Share Buyback

DiDi Global (OTCPK:DIDI.Y) saw its stock react after reporting higher third-quarter revenue and a marked jump in net income compared to last year. The company also finalized a large share buyback program.

See our latest analysis for DiDi Global.

Momentum has been building for DiDi Global, with the latest 1-year total shareholder return of 13.4% and an impressive 87.7% over three years. Recent updates, including the substantial share buyback and solid quarterly results, have helped drive renewed optimism. The share price has experienced some swings, with a year-to-date return of 13.1%. Investors seem to be recalibrating growth expectations and risk, especially as the company shows progress across multiple markets.

If DiDi's rebound has you tracking other standout movers, this could be your cue to discover fast growing stocks with high insider ownership.

But with shares trading at a significant discount to analyst targets despite double-digit returns, is DiDi Global truly undervalued? Or is the market already factoring in all the future growth ahead?

Price-to-Sales of 0.8x: Is it justified?

DiDi Global is trading at a price-to-sales (P/S) ratio of just 0.8x, well below both its peer average of 3.1x and the US Transportation industry average of 1x. At a last close of $5.35, the current P/S signals that the market may be underestimating the value of DiDi's annual revenue streams compared to others in the sector.

The price-to-sales ratio compares a company's market capitalization with its total sales, providing investors with a sense of how much they are paying for each dollar of revenue. For a company like DiDi, which operates in a competitive, high-growth industry and is not yet consistently profitable, the P/S ratio can be particularly telling because it focuses on revenue rather than fluctuating earnings.

With DiDi's P/S multiple significantly below both peers and the wider industry average, the stock appears to be valued attractively relative to its revenue base. The fair price-to-sales ratio for DiDi is estimated at 1.4x, suggesting there is room for the market to re-rate the shares closer to what revenue trends could justify.

Explore the SWS fair ratio for DiDi Global

Result: Price-to-Sales of 0.8x (UNDERVALUED)

However, persistent net losses and fluctuating market sentiment could weigh on DiDi's valuation. These factors may prompt investors to stay cautious despite recent gains.

Find out about the key risks to this DiDi Global narrative.

Another View: SWS DCF Model Shows Greater Upside

Looking from a different angle, our SWS DCF model values DiDi at $19.47 per share, which is significantly higher than its current $5.35 market price. This approach suggests DiDi could be deeply undervalued and contrasts with the more cautious signal implied by its price-to-sales ratio. This raises the question of whether the DCF model is accounting for more long-term growth than the market anticipates.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out DiDi Global for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 920 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own DiDi Global Narrative

Keep in mind, if you'd like a different perspective or want to dig into the details yourself, you can craft your own narrative in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding DiDi Global.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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