NYSE:BABA, a growth stock which is not overvalued.

ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) has caught the eye of our stock screener as an affordable growth stock. NYSE:BABA is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

Evaluating Growth: NYSE:BABA

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:BABA scores 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.
• The Earnings Per Share has been growing by 10.68% on average over the past years. This is quite good.
• The Revenue has been growing by 28.26% on average over the past years. This is a very strong growth!
• The Earnings Per Share is expected to grow by 11.82% on average over the next years. This is quite good.
• 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.

A Closer Look at Valuation for NYSE:BABA

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NYSE:BABA boasts a 8 out of 10:

• A Price/Earnings ratio of 10.55 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.
• Compared to an average S&P500 Price/Earnings ratio of 25.88, BABA is valued rather cheaply.
• Based on the Price/Forward Earnings ratio of 8.53, the valuation of BABA can be described as reasonable.
• 82.35% of the companies in the same industry are more expensive than BABA, based on the Price/Forward Earnings ratio.
• BABA is valuated cheaply when we compare the Price/Forward Earnings ratio to 18.97, which is the current average of the S&P500 Index.
• 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.

Deciphering NYSE:BABA's Health Rating

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:

• BABA has a Altman-Z score of 2.76. This is in the better half of the industry: BABA outperforms 67.65% 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.
• Looking at the Debt to Equity ratio, with a value of 0.15, BABA is in the better half of the industry, outperforming 61.76% of the companies in the same industry.
• Looking at the Current ratio, with a value of 1.92, BABA is in the better half of the industry, outperforming 64.71% of the companies in the same industry.
• BABA's Quick ratio of 1.92 is fine compared to the rest of the industry. BABA outperforms 76.47% of its industry peers.

Looking at the Profitability

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:

• Looking at the Return On Assets, with a value of 4.73%, BABA belongs to the top of the industry, outperforming 82.35% of the companies in the same industry.
• The Return On Equity of BABA (8.22%) is better than 73.53% of its industry peers.
• BABA has a better Return On Invested Capital (6.04%) than 70.59% of its industry peers.
• The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.04%), indicating increased profibility in the last year.
• The Profit Margin of BABA (9.37%) is better than 88.24% of its industry peers.
• BABA has a better Operating Margin (13.67%) than 85.29% of its industry peers.

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

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.