When you look at NYSE:BABA, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Our stock screening tool has pinpointed ALIBABA GROUP HOLDING-SP ADR (NYSE:BABA) as an undervalued stock option. NYSE:BABA retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Analyzing Valuation Metrics

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NYSE:BABA scores a 8 out of 10:

• The Price/Earnings ratio is 8.71, which indicates a very decent valuation of BABA.
• Based on the Price/Earnings ratio, BABA is valued cheaply inside the industry as 90.91% of the companies are valued more expensively.
• BABA is valuated cheaply when we compare the Price/Earnings ratio to 26.07, which is the current average of the S&P500 Index.
• Based on the Price/Forward Earnings ratio of 8.44, the valuation of BABA can be described as reasonable.
• BABA's Price/Forward Earnings ratio is rather cheap when compared to the industry. BABA is cheaper than 84.85% of the companies in the same industry.
• BABA is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.37, 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 96.97% 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 90.91% 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.

Profitability Examination for NYSE:BABA

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:BABA has achieved a 6:

• With a decent Return On Assets value of 5.49%, BABA is doing good in the industry, outperforming 66.67% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 9.89%, BABA is in the better half of the industry, outperforming 60.61% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 6.23%, BABA is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
• The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.23%), indicating increased profibility in the last year.
• BABA's Profit Margin of 10.78% is amongst the best of the industry. BABA outperforms 87.88% of its industry peers.
• With an excellent Operating Margin value of 13.41%, BABA belongs to the best of the industry, outperforming 90.91% of the companies in the same industry.

Assessing Health for NYSE:BABA

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NYSE:BABA has earned a 6 out of 10:

• BABA has a Altman-Z score of 2.47. This is in the better half of the industry: BABA outperforms 63.64% of its industry peers.
• BABA has a debt to FCF ratio of 0.98. This is a very positive value and a sign of high solvency as it would only need 0.98 years to pay back of all of its debts.
• Looking at the Debt to FCF ratio, with a value of 0.98, BABA is in the better half of the industry, outperforming 75.76% of the companies in the same industry.
• BABA has a Debt/Equity ratio of 0.14. This is a healthy value indicating a solid balance between debt and equity.
• Looking at the Debt to Equity ratio, with a value of 0.14, BABA is in the better half of the industry, outperforming 60.61% of the companies in the same industry.
• With a decent Quick ratio value of 1.80, BABA is doing good in the industry, outperforming 66.67% of the companies in the same industry.

Evaluating Growth: 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 5 out of 10:

• The Earnings Per Share has grown by an impressive 20.98% 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.
• 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.

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

Our latest full fundamental report of BABA contains the most current fundamental analsysis.

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.