Alibaba Stock Analysis (NYSE:BABA)

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$102.46 $1.74 (1.67%) BABA stock closing price Feb 23, 2017 (Closing)
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Alibaba
Updated on : Feb 23, 2017
previous close
BABA 102.5 (0%)
S&P 500 2363.8 (0%)
Closing Price On: Feb 23, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Commerce
Sector :
Retail-Wholesale
5 Quarter Revenue
Revenue Growth
2017-Q3
$billion
%
YOY GROWTH
Compared to the industry
Operating Profit
Operating Margin:
30%
Sector Average:
5.5%
5 Quarter Net Profit
Net Margins
2017-Q3
%
LTM Margin
Compared to the industry
Cash Flow
Operating cash flow:
$5.2B
Net Income:
$2.57B
PROS      CONS
Recent Growth
Operating Margins
Net Margins
Cash Flow
ROIC
ROE
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
BABA PS :
11.9
Industry PS :
0.8
Sector:   Retail-Wholesale.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
14.4%
Return on Equity:
14%
Free Cash Flow Margin:
67.8%
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Alibaba Analysis Video

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Alibaba’s revenue has climbed ever higher as the company puts all its efforts to expand its topline. This has led to massive infrastructure creation causing Alibaba’s assets to baloon. Alibaba’s stock analysis shows that while Alibaba's revenue growth makes the stock attractive, its expensive valuations make it risky. And unlike other fast growing ecommerce firms Alibaba has solid profit margins.

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Alibaba Group Holding Ltd Stock Rating (3/5)

Should you buy BABA stock?

  • The Year Over Year (YoY) revenue growth for Alibaba was 43.8% in 2017 Q3.
  • Alibaba's average operating margin of 30% was exceptional.
  • Net margins stood at a healthy 26.6% (average) for Alibaba in the Trailing Twelve Months.
  • The company has an operating cash flow which is 2 times the net income. We see this as a positive signal.
  • Alibaba has an attractive ROIC (Return on Invested Capital) of 14.4%
  • The LTM ROE of 14% for Alibaba is attractive.
  • Alibaba has a healthy FCF (Free Cash Flow) margin of 67.8%.

Should you sell BABA stock?

  • The BABA stock currently trades at a PE of 42, which is expensive, compared to the industry average of 19.7.
  • The company is trading at a price to sales multiple of 11.9, which is higher in comparison to the Internet Commerce industry average of 0.8, making BABA stock expensive.

Comments on this video and Alibaba stock

Alibaba’s stock price has fluctuated also based on the perceived strengths and weaknesses of the Chinese economy as majority of its revenues come from China. Alibaba stock price history shows that the stock saw a steep decline in 2015 when the concerns around Chinese economy were at its peak. The stock later recovered when the concerns around Chinese economy receded. Alibaba has managed a very high revenue growth rate in spite of its size. Alibaba is also expanding in to areas which will boost profits.

Alibaba PE ratio chart shows that the stock is expensive. Alibaba is also expanding in to cloud computing through Aliyun and payments through Ant Financials.