Alibaba Stock Analysis (NYSE:BABA)

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$106.09 $1 (0.95%) BABA stock closing price Mar 22, 2017 (Closing)
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Alibaba
Updated on : Mar 22, 2017
previous close
BABA 106.1 (0%)
S&P 500 2348.5 (0%)
Closing Price On: Mar 22, 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:
7.3%
5 Quarter Net Profit
Net Margins
2017-Q3
%
LTM Margin
Compared to the industry
Debt/Equity Ratio
Debt:
13.08B
Debt/Equity Ratio:
 0.3
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
FCF Margin
High Debt Burden
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
BABA PS :
12.3
Industry PS :
0.7
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?

  • 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.

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.