Decent Value Stocks. Analyze the stocks with a good fundamental valuation, while still showing decent profitability, health and growth.


ALIBABA GROUP HOLDING-SP ADR

New York Stock Exchange, Inc. / Consumer Discretionary / Broadline Retail

Fundamental Rating

6

BABA gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 34 industry peers in the Broadline Retail industry. BABA has only an average score on both its financial health and profitability. A decent growth rate in combination with a cheap valuation! Better keep an eye on BABA. With these ratings, BABA could be worth investigating further for value investing!.



6

1. Profitability

1.1 Basic Checks

BABA had positive earnings in the past year.
BABA had a positive operating cash flow in the past year.
Each year in the past 5 years BABA has been profitable.
Each year in the past 5 years BABA had a positive operating cash flow.

1.2 Ratios

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.
BABA has a better Return On Equity (9.89%) than 60.61% of its industry peers.
BABA has a better Return On Invested Capital (6.23%) than 63.64% of its industry peers.
The Average Return On Invested Capital over the past 3 years for BABA is significantly below the industry average of 11.22%.
The 3 year average ROIC (5.01%) for BABA is below the current ROIC(6.23%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 5.49%
ROE 9.89%
ROIC 6.23%
ROA(3y)5.56%
ROA(5y)7.43%
ROE(3y)9.96%
ROE(5y)13.49%
ROIC(3y)5.01%
ROIC(5y)5.32%

1.3 Margins

Looking at the Profit Margin, with a value of 10.78%, BABA belongs to the top of the industry, outperforming 87.88% of the companies in the same industry.
In the last couple of years the Profit Margin of BABA has declined.
BABA has a better Operating Margin (13.41%) than 90.91% of its industry peers.
BABA's Operating Margin has declined in the last couple of years.
The Gross Margin of BABA (37.78%) is comparable to the rest of the industry.
In the last couple of years the Gross Margin of BABA has declined.
Industry RankSector Rank
OM 13.41%
PM (TTM) 10.78%
GM 37.78%
OM growth 3Y-13.82%
OM growth 5Y-15.72%
PM growth 3Y-34.19%
PM growth 5Y-20.06%
GM growth 3Y-6.53%
GM growth 5Y-8.53%

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6

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), BABA is destroying value.
Compared to 1 year ago, BABA has less shares outstanding
Compared to 5 years ago, BABA has about the same amount of shares outstanding.
BABA has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.38 indicates that BABA is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.38, BABA is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
The Debt to FCF ratio of BABA is 0.98, which is an excellent value as it means it would take BABA, only 0.98 years of fcf income to pay off 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.
A Debt/Equity ratio of 0.14 indicates that BABA is not too dependend on debt financing.
With a decent Debt to Equity ratio value of 0.14, BABA is doing good in the industry, outperforming 63.64% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.14
Debt/FCF 0.98
Altman-Z 2.38
ROIC/WACC0.81
WACC7.73%

2.3 Liquidity

A Current Ratio of 1.80 indicates that BABA should not have too much problems paying its short term obligations.
BABA has a Current ratio (1.80) which is in line with its industry peers.
BABA has a Quick Ratio of 1.80. This is a normal value and indicates that BABA is financially healthy and should not expect problems in meeting its short term obligations.
BABA has a better Quick ratio (1.80) than 69.70% of its industry peers.
Industry RankSector Rank
Current Ratio 1.8
Quick Ratio 1.8

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5

3. Growth

3.1 Past

BABA shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.98%, which is quite impressive.
The Earnings Per Share has been growing by 10.68% on average over the past years. This is quite good.
Looking at the last year, BABA shows a small growth in Revenue. The Revenue has grown by 7.28% in the last year.
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.
EPS 1Y (TTM)20.98%
EPS 3Y0.95%
EPS 5Y10.68%
EPS growth Q2Q-1.51%
Revenue 1Y (TTM)7.28%
Revenue growth 3Y19.45%
Revenue growth 5Y28.26%
Revenue growth Q2Q5.08%

3.2 Future

BABA is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.13% yearly.
BABA is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.25% yearly.
EPS Next Y17.92%
EPS Next 2Y8.87%
EPS Next 3Y10.07%
EPS Next 5Y7.13%
Revenue Next Year8.15%
Revenue Next 2Y8.04%
Revenue Next 3Y7.88%
Revenue Next 5Y7.25%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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9

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 7.95, which indicates a rather cheap 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 24.80, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 7.71, the valuation of BABA can be described as very cheap.
Based on the Price/Forward Earnings ratio, BABA is valued cheaply inside the industry as 84.85% of the companies are valued more expensively.
BABA is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.27, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 7.95
Fwd PE 7.71

4.2 Price Multiples

BABA's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. BABA is cheaper than 100.00% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, BABA is valued cheaper than 87.88% of the companies in the same industry.
Industry RankSector Rank
P/FCF 7.34
EV/EBITDA 2.56

4.3 Compensation for Growth

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.
PEG (NY)0.44
PEG (5Y)0.74
EPS Next 2Y8.87%
EPS Next 3Y10.07%

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2

5. Dividend

5.1 Amount

BABA has a Yearly Dividend Yield of 1.31%.
Compared to an average industry Dividend Yield of 4.21, BABA pays a bit more dividend than its industry peers.
With a Dividend Yield of 1.31, BABA pays less dividend than the S&P500 average, which is at 2.40.
Industry RankSector Rank
Dividend Yield 1.31%

5.2 History

BABA is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0

5.3 Sustainability

DPN/A
EPS Next 2Y8.87%
EPS Next 3Y10.07%

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