Don't overlook NYSE:BABA—it's a hidden gem with strong fundamentals and an attractive price tag.

Last update: Dec 18, 2023

ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) has caught the attention of our stock screener as a great value stock. NYSE:BABA excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Understanding NYSE:BABA's Valuation Score

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:BABA has achieved a 9 out of 10:

BABA is valuated reasonably with a Price/Earnings ratio of 8.41.
BABA's Price/Earnings ratio is rather cheap when compared to the industry. BABA is cheaper than 94.12% of the companies in the same industry.
BABA is valuated cheaply when we compare the Price/Earnings ratio to 25.46, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 7.21, the valuation of BABA can be described as very cheap.
BABA's Price/Forward Earnings ratio is rather cheap when compared to the industry. BABA is cheaper than 85.29% of the companies in the same industry.
BABA is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.07, which is the current average of the S&P500 Index.
BABA's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. BABA is cheaper than 94.12% of the companies in the same industry.
BABA's Price/Free Cash Flow ratio is rather cheap when compared to the industry. BABA is cheaper than 88.24% of the companies in the same industry.
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.
A more expensive valuation may be justified as BABA's earnings are expected to grow with 13.99% in the coming years.

A Closer Look at Profitability for NYSE:BABA

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:BABA scores a 6 out of 10:

BABA's Return On Assets of 7.31% is amongst the best of the industry. BABA outperforms 82.35% of its industry peers.
The Return On Equity of BABA (12.79%) is better than 64.71% of its industry peers.
With a decent Return On Invested Capital value of 6.34%, BABA is doing good in the industry, outperforming 61.76% of the companies in the same industry.
The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.34%), indicating increased profibility in the last year.
With an excellent Profit Margin value of 14.47%, BABA belongs to the best of the industry, outperforming 91.18% of the companies in the same industry.
With an excellent Operating Margin value of 14.33%, BABA belongs to the best of the industry, outperforming 88.24% of the companies in the same industry.

Health Insights: NYSE:BABA

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:BABA has received a 6 out of 10:

BABA's Altman-Z score of 2.53 is fine compared to the rest of the industry. BABA outperforms 64.71% of its industry peers.
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.
Looking at the Debt to FCF ratio, with a value of 0.78, BABA is in the better half of the industry, outperforming 79.41% 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.
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.
The Current ratio of BABA (1.94) is better than 61.76% of its industry peers.
With a decent Quick ratio value of 1.94, BABA is doing good in the industry, outperforming 73.53% of the companies in the same industry.

Exploring NYSE:BABA's Growth

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:BABA was assigned a score of 5 for growth:

The Earnings Per Share has grown by an impressive 27.42% over the past year.
BABA shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.68% yearly.
The Revenue has been growing by 28.26% on average over the past years. This is a very strong growth!

More Decent Value stocks can be found in our Decent Value 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.