NYSE:BABA is probably undervalued for the fundamentals it is displaying.

Last update: Apr 4, 2024

Our stock screening tool has pinpointed ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) as an undervalued stock. NYSE:BABA maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Assessing Valuation for NYSE:BABA

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:BABA has received a 8 out of 10:

BABA is valuated reasonably with a Price/Earnings ratio of 8.36.
Based on the Price/Earnings ratio, BABA is valued cheaper than 90.91% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.07. BABA is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 8.11, which indicates a very decent valuation of BABA.
Based on the Price/Forward Earnings ratio, BABA is valued cheaply inside the industry as 81.82% of the companies are valued more expensively.
BABA is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.41, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaply inside the industry as 100.00% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, BABA is valued cheaper than 90.91% of the companies in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of BABA may justify a higher PE ratio.

How do we evaluate the Profitability for NYSE:BABA?

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:BABA, the assigned 6 is noteworthy for profitability:

With a decent Return On Assets value of 5.49%, BABA is doing good in the industry, outperforming 66.67% of the companies in the same industry.
Looking at the Return On Equity, with a value of 9.89%, BABA is in the better half of the industry, outperforming 60.61% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 6.23%, BABA is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.23%), indicating increased profibility in the last year.
The Profit Margin of BABA (10.78%) is better than 87.88% of its industry peers.
BABA has a Operating Margin of 13.41%. This is amongst the best in the industry. BABA outperforms 90.91% of its industry peers.

What does the Health looks like for NYSE:BABA

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:BABA, the assigned 6 reflects its health status:

BABA's Altman-Z score of 2.43 is fine compared to the rest of the industry. BABA outperforms 63.64% of its industry peers.
BABA has a debt to FCF ratio of 0.98. This is a very positive value and a sign of high solvency as it would only need 0.98 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 0.98, BABA is doing good in the industry, outperforming 75.76% of the companies in the same industry.
A Debt/Equity ratio of 0.14 indicates that BABA is not too dependend on debt financing.
BABA has a Debt to Equity ratio of 0.14. This is in the better half of the industry: BABA outperforms 63.64% of its industry peers.
Looking at the Quick ratio, with a value of 1.80, BABA is in the better half of the industry, outperforming 66.67% of the companies in the same industry.

Growth Analysis for NYSE:BABA

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 5 out of 10:

The Earnings Per Share has grown by an impressive 20.98% 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.
Measured over the past years, BABA shows a very strong growth in Revenue. The Revenue has been growing by 28.26% on average per year.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of BABA for a complete fundamental analysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.