Investors seeking growth at a reasonable cost should explore NYSE:BABA.

Here's ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) for you, a growth stock our stock screener believes is undervalued. NYSE:BABA is scoring impressively in terms of growth while demonstrating strong financials. On top of that, it remains attractively priced. Let's break it down further.

Assessing Growth 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 7 out of 10:

• BABA shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 26.33%, which is quite impressive.
• 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.
• Based on estimates for the next years, BABA will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.82% on average per year.
• 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.

Assessing Valuation Metrics for NYSE:BABA

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:BABA was assigned a score of 8 for valuation:

• With a Price/Earnings ratio of 10.58, the valuation of BABA can be described as very reasonable.
• Based on the Price/Earnings ratio, BABA is valued cheaper than 82.35% of the companies in the same industry.
• BABA's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.92.
• A Price/Forward Earnings ratio of 8.55 indicates a reasonable valuation of BABA.
• Based on the Price/Forward Earnings ratio, BABA is valued cheaply inside the industry as 82.35% of the companies are valued more expensively.
• The average S&P500 Price/Forward Earnings ratio is at 19.00. BABA is valued rather cheaply when compared to this.
• Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaper than 85.29% of the companies in the same industry.
• Based on the Price/Free Cash Flow ratio, BABA is valued a bit cheaper than the industry average as 76.47% of the companies are valued more expensively.
• 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.
• BABA's earnings are expected to grow with 15.16% in the coming years. This may justify a more expensive valuation.

How do we evaluate the Health for NYSE:BABA?

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:BABA has achieved a 6 out of 10:

• BABA has a better Altman-Z score (2.76) than 64.71% of its industry peers.
• 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.
• Looking at the Debt to FCF ratio, with a value of 0.78, BABA belongs to the top of the industry, outperforming 82.35% of the companies in the same industry.
• A Debt/Equity ratio of 0.15 indicates that BABA is not too dependend on debt financing.
• With a decent Current ratio value of 1.92, BABA is doing good in 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.

Understanding NYSE:BABA's Profitability

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:BABA has earned a 6 out of 10:

• The Return On Assets of BABA (4.73%) is better than 79.41% of its industry peers.
• 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's Return On Invested Capital of 6.04% is fine compared to the rest of the industry. BABA outperforms 67.65% of its industry peers.
• The last Return On Invested Capital (6.04%) for BABA is above the 3 year average (5.01%), which is a sign of increasing profitability.
• The Profit Margin of BABA (9.37%) is better than 91.18% of its industry peers.
• BABA has a Operating Margin of 13.67%. This is amongst the best in the industry. BABA outperforms 88.24% of its industry peers.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

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

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.