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 scores decently on growth, while it is valued quite cheap. This could make an interesting combination. This makes BABA very considerable 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

BABA's Return On Assets of 5.49% is fine compared to the rest of the industry. BABA outperforms 66.67% of its industry peers.
With a decent Return On Equity value of 9.89%, BABA is doing good in 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.
The Average Return On Invested Capital over the past 3 years for BABA 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

BABA's Profit Margin of 10.78% is amongst the best of the industry. BABA outperforms 87.88% of its industry peers.
In the last couple of years the Profit Margin of BABA has declined.
BABA's Operating Margin of 13.41% is amongst the best of the industry. BABA outperforms 90.91% of its industry peers.
BABA's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 37.78%, BABA is in line with its industry, outperforming 42.42% of the companies in the same 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

BABA has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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.
Compared to 1 year ago, BABA has a worse debt to assets ratio.

2.2 Solvency

BABA has an Altman-Z score of 2.38. This is not the best score and indicates that BABA is in the grey zone with still only limited risk for bankruptcy at the moment.
BABA's Altman-Z score of 2.38 is fine compared to the rest 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.
The Debt to FCF ratio of BABA (0.98) is better than 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.
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
WACC7.74%

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

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.
BABA shows a small growth in Revenue. In the last year, the Revenue has grown by 7.28%.
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

Based on estimates for the next years, BABA will show a small growth in Earnings Per Share. The EPS will grow by 7.13% on average per year.
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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9

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 7.98, the valuation of BABA can be described as very cheap.
BABA's Price/Earnings ratio is rather cheap when compared to the industry. BABA is cheaper than 90.91% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 24.76, BABA is valued rather cheaply.
A Price/Forward Earnings ratio of 7.73 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's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.26.
Industry RankSector Rank
PE 7.98
Fwd PE 7.73

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 7.36
EV/EBITDA 2.56

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)0.45
PEG (5Y)0.75
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.
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 2.40.
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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