Alibaba Stock Analysis, Valuation (NYSE:BABA)

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$206.23 $1.8 (0.88%) BABA stock closing price Jun 20, 2018 (Closing)

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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Note: Amigobulls stock rating is our opinion based on the historical performance of the company's fundamentals. It is not indicative of the future performance of the stock.

Alibaba Group Holding Ltd Stock Rating 3/5

Should you buy BABA stock?

  • The Year Over Year (YoY) revenue growth for Alibaba was 76.1% in 2018-03.
  • The TTM operating margin was good at 29.04 for Alibaba.
  • Net margins stood at a healthy 25.4% (average) for Alibaba in the Trailing Twelve Months.
  • The company has an operating cash flow which is 2.4013 times the net income.
  • Alibaba's return on invested capital of 19.7 is good.
  • The LTM ROE of 16.9 for Alibaba is attractive.
  • The company has a healthy free cash flow margin of 29.3.

Should you sell BABA stock?

  • The BABA stock currently trades at a PE of 53.7, which is expensive, compared to the sector average of 21.5.
  • The company is trading at a price to sales multiple of 13.8, which is higher in comparison to the Retail-Wholesale sector 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.