Alibaba Stock Analysis (NYSE:BABA)
Alibaba Analysis Video
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.
Alibaba Group Holding Ltd Stock Rating (3/5)
Should you buy BABA stock?
- Alibaba sales grew by 43.8% year on year in 2017 Q3.
- Alibaba's average operating margin of 30% was exceptional.
- LTM Net margins were good at 26.6% for Alibaba.
- The operating cash flow looks good at 2 times the net income.
- Alibaba's return on invested capital of 14.4% is good.
- The company has a healthy free cash flow margin of 67.8%.
Should you sell BABA stock?
- Alibaba has a debt/equity ratio of 0.3, which is worse than the average in the Retail-Wholesale sector.
- The BABA stock currently trades at a PE of 43.5, which is expensive, compared to the industry average of 18.7.
- The company is trading at a price to sales multiple of 12.3, which is overvalued in comparison to the Internet Commerce industry average multiple of 0.7.
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.