Alibaba Group Holding Ltd (BABA, Financial) has seen a daily gain of 5.06% and a 3-month gain of 1.17%. The company's Earnings Per Share (EPS) stands at 4.62. But the question remains, is the stock modestly undervalued? This article aims to provide an in-depth valuation analysis of Alibaba Group Holding (BABA). We encourage you to read on to gain a better understanding of the company's intrinsic value.
Company Overview
Alibaba Group Holding is the world's largest online and mobile commerce company, with a gross merchandise volume of CNY 8.3 trillion for the fiscal year ended March 2022. The company operates China's most prominent online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). With a current stock price of $88.37, Alibaba Group Holding Ltd (BABA, Financial) has a market cap of $225 billion, indicating that the stock is modestly undervalued.
Understanding GF Value
The GF Value represents the intrinsic value of a stock, derived from our exclusive method. It is calculated based on historical multiples that the stock has traded at, a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance. The GF Value Line on our summary page gives an overview of the fair value that the stock should be traded at.
Alibaba Group Holding (BABA, Financial) stock seems to be modestly undervalued based on the GuruFocus Value calculation. This suggests that the long-term return of Alibaba Group Holding's stock is likely to be higher than its business growth.
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Financial Strength
It is always important to check the financial strength of a company before investing. Alibaba Group Holding has a cash-to-debt ratio of 3.29, which is better than 80.89% of 1099 companies in the Retail - Cyclical industry. The overall financial strength of Alibaba Group Holding is 7 out of 10, indicating fair financial strength.
Profitability and Growth
Investing in profitable companies is less risky, especially those with consistent profitability over the long term. Alibaba Group Holding's profitability is ranked 9 out of 10, indicating strong profitability. The company's growth ranks worse than 80.36% of 896 companies in the Retail - Cyclical industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted average cost of capital (WACC) is another way to assess profitability. For the past 12 months, Alibaba Group Holding's return on invested capital is 8.67, and its cost of capital is 5.56.
Conclusion
Overall, Alibaba Group Holding (BABA, Financial) stock appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. To learn more about Alibaba Group Holding stock, you can check out its 30-Year Financials here.
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