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. Both the profitability and the financial health of BABA get a neutral evaluation. Nothing too spectacular is happening here. BABA scores decently on growth, while it is valued quite cheap. This could make an interesting combination. These ratings could make BABA a good candidate for value investing.



6

1. Profitability

1.1 Basic Checks

In the past year BABA was profitable.
In the past year BABA had a positive cash flow from operations.
In the past 5 years BABA has always been profitable.
BABA had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of BABA (5.49%) is better than 66.67% of its industry peers.
BABA has a better Return On Equity (9.89%) than 60.61% of its industry peers.
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.
BABA had an Average Return On Invested Capital over the past 3 years of 5.01%. This is significantly below the industry average of 10.82%.
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

BABA has a better Profit Margin (10.78%) than 87.88% of its industry peers.
In the last couple of years the Profit Margin of BABA has declined.
The Operating Margin of BABA (13.41%) is better 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%

6

2. Health

2.1 Basic Checks

BABA has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for BABA has been reduced compared to 1 year ago.
The number of shares outstanding for BABA remains at a similar level compared to 5 years ago.
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.
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.
BABA's Debt to FCF ratio of 0.98 is fine compared to the rest of the industry. BABA outperforms 75.76% of its industry peers.
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 60.61% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.14
Debt/FCF 0.98
Altman-Z 2.41
ROIC/WACC0.76
WACC8.24%

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.
A Quick Ratio of 1.80 indicates that BABA should not have too much problems paying its short term obligations.
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.
Industry RankSector Rank
Current Ratio 1.8
Quick Ratio 1.8

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.
The Revenue has been growing slightly by 7.28% in the past 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.
The Revenue is expected to grow by 7.25% on average over the next years.
EPS Next Y17.56%
EPS Next 2Y8.84%
EPS Next 3Y10.12%
EPS Next 5Y7.13%
Revenue Next Year7.93%
Revenue Next 2Y7.92%
Revenue Next 3Y7.86%
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.

8

4. Valuation

4.1 Price/Earnings Ratio

BABA is valuated reasonably with a Price/Earnings ratio of 8.26.
Based on the Price/Earnings ratio, BABA is valued cheaper than 90.91% of the companies in the same industry.
BABA's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.42.
A Price/Forward Earnings ratio of 8.00 indicates a reasonable valuation of BABA.
Based on the Price/Forward Earnings ratio, BABA is valued cheaper than 84.85% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.74, BABA is valued rather cheaply.
Industry RankSector Rank
PE 8.26
Fwd PE 8

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.
90.91% of the companies in the same industry are more expensive than BABA, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 7.62
EV/EBITDA 2.84

4.3 Compensation for Growth

BABA's 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)0.47
PEG (5Y)0.77
EPS Next 2Y8.84%
EPS Next 3Y10.12%

2

5. Dividend

5.1 Amount

BABA has a Yearly Dividend Yield of 1.33%.
Compared to an average industry Dividend Yield of 3.98, BABA pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.34, BABA's dividend is way lower than the S&P500 average.
Industry RankSector Rank
Dividend Yield 1.33%

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 2Y8.84%
EPS Next 3Y10.12%