Why Full Truck Alliance Stock Is Jumping Today

What happened

Full Truck Alliance (YMM 11.78%) is making gains Wednesday following its recent second-quarter earnings release. The Chinese shipping-services company’s share price was up 12.3% as of 3:15 p.m. ET, according to data from S&P Global Market Intelligence.

Full Truck Alliance posted non-GAAP (adjusted) earnings per American depositary share of $0.09 on sales of $284.4 million. These results came in significantly better than the average Wall Street target, which called for adjusted per-share earnings of $0.06 on revenue of $274.4 million.

So what

Full Truck Alliance operates a mobile-based platform that connects customers who need freight transported with shippers and truckers. With fulfilled orders jumping 44.5% year over year to reach $27.8 million in Q2, Full Truck Alliance’s revenue soared 23.5% year over year in the period. 

Monthly average users (MAUs) for the company’s shipping platform reached 2 million in the quarter, up 30.5% year over year. Meanwhile, total orders fulfilled through the company’s platform in the quarter rose 44.5% year over year to hit 27.8 million.

Now what

For the full-year period, Full Truck expects to post sales between 2.16 billion yuan (approximately $299.6 million) and 2.2 billion yuan (approximately $305.1 million). Based on that target range, the company is guiding for annual-sales growth between 19.2% to 21.6%.

YMM PE Ratio (Forward) data by YCharts.

With today’s gains, Full Truck is now valued at approximately 25 times this year’s expected adjusted earnings and roughly 6.6 times expected sales. The stock actually looks reasonably valued in the context of recent performance for the business, but investors should weigh their personal-risk tolerance before building substantial positions in China-based stocks. 

In addition to unexpectedly weak economic growth as China emerges from pandemic-related lockdowns, rising tensions with the U.S. have also weighed on equity valuations for companies based in the Middle Kingdom, as China is sometimes referred to. It’s possible that Full Truck Alliance will deliver strong results over the long term, but factors outside of the company’s business performance could play a big role in shaping where the stock goes from here. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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