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

Overall BABA gets a fundamental rating of 6 out of 10. We evaluated BABA against 34 industry peers in the Broadline Retail industry. BABA has an average financial health and profitability rating. 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

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.
The Return On Invested Capital of BABA (6.23%) is better than 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 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

The Profit Margin of BABA (10.78%) is better than 87.88% of its industry peers.
BABA's Profit Margin has declined in the last couple of years.
BABA has a Operating Margin of 13.41%. This is amongst the best in the industry. BABA outperforms 90.91% of its industry peers.
In the last couple of years the Operating Margin of BABA has declined.
BABA has a Gross Margin (37.78%) which is comparable to the rest of the industry.
BABA's Gross Margin has declined in the last couple of years.
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.
The number of shares outstanding for BABA has been reduced compared to 1 year ago.
Compared to 5 years ago, BABA has about the same amount of shares outstanding.
The debt/assets ratio for BABA is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 2.40 indicates that BABA is not a great score, but indicates only limited risk for bankruptcy at the moment.
BABA has a Altman-Z score of 2.40. 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.
BABA has a Debt to Equity ratio of 0.14. This is in the better half of the industry: BABA outperforms 63.64% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.14
Debt/FCF 0.98
Altman-Z 2.4
ROIC/WACC0.8
WACC7.76%

2.3 Liquidity

A Current Ratio of 1.80 indicates that BABA should not have too much problems paying its short term obligations.
The Current ratio of BABA (1.80) is comparable to the rest of the industry.
A Quick Ratio of 1.80 indicates that BABA should not have too much problems paying 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

The Earnings Per Share has grown by an impressive 20.98% over the past year.
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.
The Revenue has been growing by 28.26% on average over the past years. This is a very strong growth!
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.
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

BABA is valuated reasonably with a Price/Earnings ratio of 8.15.
BABA's Price/Earnings ratio is rather cheap when compared to the industry. BABA is cheaper than 87.88% of the companies in the same industry.
BABA is valuated cheaply when we compare the Price/Earnings ratio to 25.05, which is the current average of the S&P500 Index.
BABA is valuated cheaply with a Price/Forward Earnings ratio of 7.90.
84.85% of the companies in the same industry are more expensive than BABA, based on the Price/Forward Earnings ratio.
BABA's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.53.
Industry RankSector Rank
PE 8.15
Fwd PE 7.9

4.2 Price Multiples

100.00% of the companies in the same industry are more expensive than BABA, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of BABA indicates a rather cheap valuation: BABA is cheaper than 87.88% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 7.53
EV/EBITDA 2.74

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)0.46
PEG (5Y)0.76
EPS Next 2Y8.87%
EPS Next 3Y10.07%

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2

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 1.31%, BABA has a reasonable but not impressive dividend return.
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 2.39.
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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