NYSE:BABA is showing decent growth, but is still valued reasonably.

Last update: Oct 3, 2023

ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) has caught the eye of our stock screener as an affordable growth stock. NYSE:BABA is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

Exploring NYSE:BABA's Growth

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:BABA boasts a 7 out of 10:

The Earnings Per Share has grown by an impressive 26.33% over the past year.
Measured over the past years, BABA shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.68% on average per year.
BABA shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 28.26% yearly.
BABA is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.82% yearly.
Based on estimates for the next years, BABA will show a quite strong growth in Revenue. The Revenue will grow by 9.65% on average per year.

Exploring NYSE:BABA's Valuation

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NYSE:BABA has earned a 8 for valuation:

Based on the Price/Earnings ratio of 10.49, the valuation of BABA can be described as reasonable.
Based on the Price/Earnings ratio, BABA is valued cheaply inside the industry as 85.29% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 25.50, BABA is valued rather cheaply.
The Price/Forward Earnings ratio is 8.47, which indicates a very decent valuation of BABA.
82.35% of the companies in the same industry are more expensive than BABA, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of BABA to the average of the S&P500 Index (18.66), we can say BABA is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaply inside the industry as 88.24% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of BABA indicates a somewhat cheap valuation: BABA is cheaper than 79.41% of the companies listed in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
BABA has a very decent profitability rating, which may justify a higher PE ratio.
BABA's earnings are expected to grow with 15.16% in the coming years. This may justify a more expensive valuation.

Evaluating Health: NYSE:BABA

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NYSE:BABA, the assigned 6 for health provides valuable insights:

With a decent Altman-Z score value of 2.75, BABA is doing good in the industry, outperforming 64.71% of the companies in the same industry.
The Debt to FCF ratio of BABA is 0.78, which is an excellent value as it means it would take BABA, only 0.78 years of fcf income to pay off all of its debts.
BABA's Debt to FCF ratio of 0.78 is amongst the best of the industry. BABA outperforms 82.35% of its industry peers.
A Debt/Equity ratio of 0.15 indicates that BABA is not too dependend on debt financing.
Looking at the Current ratio, with a value of 1.92, BABA is in the better half of the industry, outperforming 61.76% of the companies in the same industry.
BABA has a better Quick ratio (1.92) than 76.47% of its industry peers.

Evaluating Profitability: NYSE:BABA

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:BABA, the assigned 6 is a significant indicator of profitability:

With a decent Return On Assets value of 4.73%, BABA is doing good in the industry, outperforming 79.41% of the companies in the same industry.
With a decent Return On Equity value of 8.22%, BABA is doing good in the industry, outperforming 73.53% of the companies in the same industry.
BABA has a better Return On Invested Capital (6.04%) than 67.65% of its industry peers.
The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.04%), indicating increased profibility in the last year.
BABA's Profit Margin of 9.37% is amongst the best of the industry. BABA outperforms 91.18% of its industry peers.
BABA has a better Operating Margin (13.67%) than 88.24% of its industry peers.

More Affordable Growth stocks can be found in our Affordable Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of BABA

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.