While growth is established for NYSE:BABA, the stock's valuation remains reasonable.

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.

How We Gauge Growth for NYSE:BABA

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NYSE:BABA has achieved 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.
• 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.

Valuation Assessment of 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:

• BABA is valuated reasonably with a Price/Earnings ratio of 10.23.
• Based on the Price/Earnings ratio, BABA is valued cheaper than 85.29% of the companies in the same industry.
• Compared to an average S&P500 Price/Earnings ratio of 25.71, BABA is valued rather cheaply.
• Based on the Price/Forward Earnings ratio of 8.27, the valuation of BABA can be described as reasonable.
• 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 is valuated cheaply when we compare the Price/Forward Earnings ratio to 18.80, which is the current average of the S&P500 Index.
• Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaper than 88.24% of the companies in the same industry.
• Based on the Price/Free Cash Flow ratio, BABA is valued a bit cheaper than 79.41% of the companies 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.

Analyzing Health Metrics

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:

• Looking at the Altman-Z score, with a value of 2.72, BABA is in the better half of the industry, outperforming 67.65% of the companies in the same industry.
• BABA has a debt to FCF ratio of 0.78. This is a very positive value and a sign of high solvency as it would only need 0.78 years to pay back of all of its debts.
• With an excellent Debt to FCF ratio value of 0.78, BABA belongs to the best 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 Debt to Equity ratio of 0.15. This is in the better half of the industry: BABA outperforms 61.76% of its industry peers.
• 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 has a better Quick ratio (1.92) than 76.47% of its industry peers.

Profitability Analysis for NYSE:BABA

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:

• BABA has a Return On Assets of 4.73%. This is amongst the best in the industry. BABA outperforms 82.35% of its industry peers.
• BABA has a Return On Equity of 8.22%. This is in the better half of the industry: BABA outperforms 73.53% of its industry peers.
• Looking at the Return On Invested Capital, with a value of 6.04%, BABA is in the better half of the industry, outperforming 70.59% 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.
• With an excellent Profit Margin value of 9.37%, BABA belongs to the best of the industry, outperforming 88.24% of the companies in the same industry.
• BABA's Operating Margin of 13.67% is amongst the best of the industry. BABA outperforms 85.29% 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

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.