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?
- The Year Over Year (YoY) revenue growth for Alibaba was 47.4% in 2017 Q2.
- Alibaba had a healthy average operating margin of 28.5% over the last 4 quarters.
- Net margins came in at average 26.4% for Alibaba over the last twelve months.
- The company has an operating cash flow which is 2.3 times the net income. We see this as a positive signal.
- Alibaba's return on invested capital of 12.9% is good.
- The company has a healthy free cash flow margin of 50%.
Should you sell BABA stock?
- Trading at a PE ratio of 46.2, BABA stock is overvalued in comparison to industry average multiple of 19.5.
- The company is trading at a price to sales multiple of 12.5, which is overvalued in comparison to the Internet Commerce industry average multiple of 0.8.
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.