What do the fundamentals predict for Alibaba Group Holding Ltd?
Alibaba Group Holding Ltd – ADR (BABA) receives a strong valuation ranking of 80 from Investors Observer data analysis. The proprietary ranking system focuses on the underlying health of a business by analyzing its stock price, earnings, and rate of growth. BABA is worth better than 80% of stocks based on these valuation analyzes. Investors primarily focused on buy and hold strategies will find the valuation ranking relevant to their goals when making investment decisions.
BABA has a twelve-month price / earnings (PE) ratio of 28.6, which puts it above the all-time average of around 15. BABA is currently trading at a low value due to investors paying more than the value of the stock in relation to its profits. BABA’s last 12-month earnings per share (EPS) of 8.41 does not justify its share price in the market. The tracking PE ratios do not take into account the company’s projected growth rate. So some companies will have high PE ratios due to high growth recruiting more investors even though the underlying company has produced low profits so far.
BABA’s 12-month PEG to growth ratio (PEG) of 1.37 is considered a mediocre value as the market overstates BABA relative to the company’s expected earnings growth. BABA’s PEG is derived from its forward price / earnings ratio divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and the stock price. Due to their integration of more fundamentals of a company’s overall health and their focus on the future rather than the past, PEG ratios are one of the most widely used valuation metrics by analysts today. ‘hui.
Overall, these valuation metrics paint a pretty poor picture for BABA at its current price due to an overvalued PEG ratio despite strong growth. BABA’s PE and PEG are lower than the market average, resulting in a valuation score of 80.
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