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

Taking everything into account, BABA scores 6 out of 10 in our fundamental rating. BABA was compared to 34 industry peers in the Broadline Retail industry. Both the profitability and the financial health of BABA get a neutral evaluation. Nothing too spectacular is happening here. BABA is valued quite cheap, while showing a decent growth score. This is a good combination! 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.
BABA had positive earnings in each of the past 5 years.
In the past 5 years BABA always reported a positive cash flow from operatings.

1.2 Ratios

The Return On Assets of BABA (5.49%) is better than 66.67% of its industry peers.
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.
BABA's Return On Invested Capital of 6.23% is fine compared to the rest of the industry. BABA outperforms 63.64% of its industry peers.
BABA had an Average Return On Invested Capital over the past 3 years of 5.01%. This is significantly below the industry average of 11.22%.
The last Return On Invested Capital (6.23%) for BABA is above the 3 year average (5.01%), which is a sign of increasing profitability.
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.
BABA's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 13.41%, BABA belongs to the top of the industry, outperforming 90.91% of the companies in the same industry.
BABA's Operating Margin has declined in the last couple of years.
BABA has a Gross Margin (37.78%) which 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.
BABA has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, BABA has about the same amount of shares outstanding.
Compared to 1 year ago, BABA has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 2.41 indicates that BABA is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of BABA (2.41) is better than 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.
BABA has a Debt to FCF ratio of 0.98. This is in the better half of the industry: BABA outperforms 75.76% of its industry peers.
A Debt/Equity ratio of 0.14 indicates that BABA is not too dependend on debt financing.
BABA has a better Debt to Equity ratio (0.14) than 63.64% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.14
Debt/FCF 0.98
Altman-Z 2.41
ROIC/WACC0.8
WACC7.76%

2.3 Liquidity

BABA has a Current 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.
With a Current ratio value of 1.80, BABA perfoms like the industry average, outperforming 57.58% of the companies in the same industry.
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.
Looking at the Quick ratio, with a value of 1.80, BABA is in the better half of the industry, outperforming 69.70% of the companies in the same industry.
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.
Measured over the past years, BABA shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.68% on average per year.
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

The Earnings Per Share is expected to grow by 7.13% on average over the next years.
Based on estimates for the next years, BABA will show a small growth in Revenue. The Revenue will grow by 7.25% on average per year.
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

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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 8.23, which indicates a very decent valuation of BABA.
84.85% of the companies in the same industry are more expensive than BABA, based on the Price/Earnings ratio.
BABA is valuated cheaply when we compare the Price/Earnings ratio to 25.34, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 7.98, which indicates a rather cheap valuation of BABA.
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 21.78, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 8.23
Fwd PE 7.98

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, BABA is valued cheaper than 100.00% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, BABA is valued cheaply inside the industry as 87.88% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 7.6
EV/EBITDA 2.81

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.
BABA has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)0.46
PEG (5Y)0.77
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%.
BABA's Dividend Yield is a higher than the industry average which is at 4.21.
With a Dividend Yield of 1.31, BABA pays less dividend than the S&P500 average, which is at 2.39.
Industry RankSector Rank
Dividend Yield 1.31%

5.2 History

BABA does not have a reliable dividend history as it only pays dividend since a couple or years.
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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