NYSE:BABA stands out as a stock that provides good value for the fundamentals it showcases.

Last update: Apr 25, 2024

ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) was identified as a decent value stock by our stock screener. NYSE:BABA scores well on profitability, solvency and liquidity. At the same time it seems to be priced very reasonably. We'll explore this a bit deeper below.

Analyzing Valuation Metrics

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:BABA scores a 8 out of 10:

A Price/Earnings ratio of 8.63 indicates a reasonable valuation of BABA.
Based on the Price/Earnings ratio, BABA is valued cheaply inside the industry as 90.91% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 25.25. BABA is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 8.36 indicates a reasonable valuation of BABA.
84.85% of the companies in the same industry are more expensive than BABA, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.67, BABA is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaper than 100.00% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of BABA indicates a rather cheap valuation: BABA is cheaper than 87.88% of the companies listed in the same industry.
BABA's 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 assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:BABA scores a 6 out of 10:

BABA's Return On Assets of 5.49% is fine compared to the rest of the industry. BABA outperforms 66.67% of its industry peers.
With a decent Return On Equity value of 9.89%, BABA is doing good in the industry, outperforming 60.61% of the companies in the same industry.
BABA's Return On Invested Capital of 6.23% is fine compared to the rest of the industry. BABA outperforms 63.64% of its industry peers.
The last Return On Invested Capital (6.23%) for BABA is above the 3 year average (5.01%), which is a sign of increasing profitability.
Looking at the Profit Margin, with a value of 10.78%, BABA belongs to the top of the industry, outperforming 87.88% of the companies in the same industry.
Looking at the Operating Margin, with a value of 13.41%, BABA belongs to the top of the industry, outperforming 90.91% of the companies in the same industry.

Understanding NYSE:BABA's Health

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:BABA has earned a 6 out of 10:

BABA has a Altman-Z score of 2.43. This is in the better half 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.
BABA has a Debt/Equity ratio of 0.14. This is a healthy value indicating a solid balance between debt and equity.
With a decent Debt to Equity ratio value of 0.14, BABA is doing good in the industry, outperforming 63.64% of the companies in the same industry.
The Quick ratio of BABA (1.80) is better than 69.70% of its industry peers.

Growth Assessment of NYSE:BABA

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NYSE:BABA has earned a 5 for growth:

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.
BABA shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 28.26% yearly.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

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

Keep in mind

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.