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

Last update: Oct 2, 2023

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

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.
The Earnings Per Share has been growing by 10.68% on average over the past years. This is quite good.
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.
BABA is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.65% yearly.

How We Gauge 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:

A Price/Earnings ratio of 10.51 indicates a reasonable valuation of BABA.
BABA's Price/Earnings ratio is rather cheap when compared to the industry. BABA is cheaper than 85.29% of the companies in the same industry.
When comparing the Price/Earnings ratio of BABA to the average of the S&P500 Index (25.75), we can say BABA is valued rather cheaply.
A Price/Forward Earnings ratio of 8.49 indicates a reasonable valuation of BABA.
82.35% of the companies in the same industry are more expensive than BABA, based on the Price/Forward Earnings ratio.
BABA's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 18.85.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of BABA indicates a rather cheap valuation: BABA is cheaper than 88.24% of the companies listed in the same industry.
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.
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.
BABA's earnings are expected to grow with 15.16% in the coming years. This may justify a more expensive valuation.

Assessing Health for NYSE:BABA

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:BABA scores a 6 out of 10:

Looking at the Altman-Z score, with a value of 2.75, BABA is in the better half of 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.
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.
BABA has a Debt/Equity ratio of 0.15. This is a healthy value indicating a solid balance between debt and equity.
BABA has a better Current ratio (1.92) than 61.76% of its industry peers.
The Quick ratio of BABA (1.92) is better than 76.47% of its industry peers.

Understanding NYSE:BABA's Profitability

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:

BABA has a Return On Assets of 4.73%. This is in the better half of the industry: BABA outperforms 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 has a better Return On Invested Capital (6.04%) than 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 better Operating Margin (13.67%) than 88.24% of its industry peers.

Every day, new Affordable Growth stocks can be found on ChartMill 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.