Alibaba Stock Analysis, Valuation (NYSE:BABA)

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$169.25 $1.75 (1.04%) BABA stock closing price Aug 21, 2017 (Closing)
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Alibaba
Updated on : Aug 18, 2017
previous close
BABA 167.5 (0%)
S&P 500 2425.6 (0%)
Closing Price On: Aug 18, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Internet Commerce
Sector :
Retail-Wholesale
5 Quarter Revenue
Revenue Growth
2017-Q4
$billion
%
YOY GROWTH
Compared to the industry
Operating Profit
Operating Margin:
30%
Sector Average:
5.6%
5 Quarter Net Profit
Net Margins
2017-Q4
%
LTM Margin
Compared to the industry
Cash Flow
Operating cash flow:
$1.65B
Net Income:
$1.55B
PROS      CONS
Recent Growth
Operating Margins
Net Margins
ROIC
ROE
FCF Margin
PE Valuation
PS Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
BABA PS :
18.1
Industry PS :
0.7
Sector:   Retail-Wholesale.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
14.6%
Return on Equity:
15.1%
Free Cash Flow Margin:
-2.3%
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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 (2.6/5)

Our Alibaba stock opinion is based on fundamentals of the company. This Alibaba stock analysis is based on latest 2018 Q1 earnings. The stock price analysis takes into account the company's valuation metrics.

Should you buy BABA stock?

  • Alibaba's revenue growth came in at 49.4% in 2017 Q4.
  • The TTM operating margin was good at 30% for Alibaba.
  • Net margins came in at average 27.5% for Alibaba over the last twelve months.
  • Alibaba generates a high return on invested capital of 14.6%.
  • Return On Equity (ROE) which is a measure of the company's profitability, looks great for Alibaba at 15.1%.

Should you sell BABA stock?

  • The BABA stock currently trades at a PE of 63.7, which is expensive, compared to the industry average of 17.7.
  • The company is trading at a price to sales multiple of 18.1, which is higher in comparison to the Internet Commerce industry average of 0.7, making BABA stock expensive.
  • Alibaba has a negative FCF (Free Cash Flow) margin of -2.3%.

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.