NYSE:BABA is not too expensive for the growth it is showing.

Our stock screener has spotted ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) as a growth stock which is not overvalued. NYSE:BABA is scoring great on several growth aspects while it also shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Exploring NYSE:BABA's Growth

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 8 out of 10:

• BABA shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 27.42%, which is quite impressive.
• BABA shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.68% yearly.
• 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 very strong growth in Revenue. The Revenue will grow by 59.77% on average per year.
• When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Exploring NYSE:BABA's Valuation

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 9 out of 10:

• A Price/Earnings ratio of 8.25 indicates a reasonable valuation of BABA.
• Compared to the rest of the industry, the Price/Earnings ratio of BABA indicates a rather cheap valuation: BABA is cheaper than 90.63% of the companies listed in the same industry.
• When comparing the Price/Earnings ratio of BABA to the average of the S&P500 Index (26.28), we can say BABA is valued rather cheaply.
• BABA is valuated cheaply with a Price/Forward Earnings ratio of 7.33.
• Based on the Price/Forward Earnings ratio, BABA is valued cheaply inside the industry as 84.38% of the companies are valued more expensively.
• When comparing the Price/Forward Earnings ratio of BABA to the average of the S&P500 Index (21.45), we can say BABA is valued rather cheaply.
• Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of BABA indicates a rather cheap valuation: BABA is cheaper than 93.75% of the companies listed in the same industry.
• BABA's Price/Free Cash Flow ratio is rather cheap when compared to the industry. BABA is cheaper than 87.50% 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.

Assessing Health Metrics for NYSE:BABA

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:BABA, the assigned 6 reflects its health status:

• BABA has a better Altman-Z score (2.49) than 62.50% 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.
• The Debt to FCF ratio of BABA (0.78) is better than 78.13% of its industry peers.
• A Debt/Equity ratio of 0.15 indicates that BABA is not too dependend on debt financing.
• With a decent Current ratio value of 1.94, BABA is doing good in the industry, outperforming 62.50% of the companies in the same industry.
• The Quick ratio of BABA (1.94) is better than 71.88% of its industry peers.

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:

• Looking at the Return On Assets, with a value of 7.31%, BABA belongs to the top of the industry, outperforming 81.25% of the companies in the same industry.
• BABA has a Return On Equity of 12.79%. This is in the better half of the industry: BABA outperforms 62.50% of its industry peers.
• The last Return On Invested Capital (6.34%) for BABA is above the 3 year average (5.01%), which is a sign of increasing profitability.
• BABA's Profit Margin of 14.47% is amongst the best of the industry. BABA outperforms 90.63% of its industry peers.
• BABA's Operating Margin of 14.33% is amongst the best of the industry. BABA outperforms 87.50% of its industry peers.

More Affordable Growth stocks can be found in our Affordable Growth screener.

Check the latest full fundamental report of BABA for a complete fundamental analysis.

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.