Don't overlook NYSE:BABA—a stock with solid growth prospects and a reasonable valuation.

Our stock screening tool has pinpointed ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) as a growth stock that isn't overvalued. NYSE:BABA is excelling in various growth indicators while maintaining a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Deciphering NYSE:BABA's Growth Rating

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:BABA has received 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.
• 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.
• 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.
• The Revenue is expected to grow by 9.65% on average over the next years. This is quite good.

Looking at the Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:BABA, the assigned 8 reflects its valuation:

• A Price/Earnings ratio of 10.43 indicates a reasonable valuation of BABA.
• Based on the Price/Earnings ratio, BABA is valued cheaper than 82.35% of the companies in the same industry.
• BABA is valuated cheaply when we compare the Price/Earnings ratio to 25.55, which is the current average of the S&P500 Index.
• The Price/Forward Earnings ratio is 8.42, which indicates a very decent valuation of BABA.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of BABA indicates a rather cheap valuation: BABA is cheaper than 82.35% of the companies listed in the same industry.
• BABA's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 18.74.
• Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaply inside the industry as 85.29% of the companies are valued more expensively.
• 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.
• 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.

Understanding NYSE:BABA's Health

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's Altman-Z score of 2.74 is fine compared to the rest of the industry. BABA outperforms 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.
• BABA's Debt to FCF ratio of 0.78 is amongst the best of the industry. BABA outperforms 82.35% of its industry peers.
• BABA has a Debt/Equity ratio of 0.15. This is a healthy value indicating a solid balance between debt and equity.
• The Current ratio of BABA (1.92) is better than 61.76% of its industry peers.
• Looking at the Quick ratio, with a value of 1.92, BABA is in the better half of the industry, outperforming 76.47% of the companies in the same industry.

Profitability Insights: NYSE:BABA

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:BABA has achieved a 6:

• BABA's Return On Assets of 4.73% is fine compared to the rest of the industry. BABA outperforms 79.41% of its industry peers.
• Looking at the Return On Equity, with a value of 8.22%, BABA is in the better half of the industry, outperforming 73.53% of the companies in the same industry.
• With a decent Return On Invested Capital value of 6.04%, BABA is doing good in the industry, outperforming 67.65% of the companies in the same industry.
• The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.04%), indicating increased profibility in the last year.
• BABA has a better Profit Margin (9.37%) than 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

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.