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Should You Buy Alibaba Group Holding Ltd - ADR (BABA) Stock Thursday?

Thursday, August 18, 2022 10:05 AM | InvestorsObserver Analysts
Should You Buy Alibaba Group Holding Ltd - ADR (BABA) Stock Thursday?

Alibaba Group Holding Ltd - ADR (BABA) receives a strong valuation score of 71 from InvestorsObserver analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock's price, earnings, and growth rate to determine if it represents a good value. BABA holds a better value than 71% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets.

Valuation Rank - 71
BABA gets a 71 Valuation Rank today. Find out what this means to you and get the rest of the rankings on BABA!

Metrics Analysis

BABA has a trailing twelve month Price to Earnings (PE) ratio of 41.6 which places it above the histroical average of roughly 15. BABA is currently trading at a poor value due to investors paying more than what the stock is worth in relation to its earnings. BABA's trailing-12-month earnings per share (EPS) of 8.41 does not justify its share price in the market. Trailing PE ratios do not factor in the company's projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far.
BABA has a 12 month forward PE to Growth (PEG) ratio of 1.58. Markets are overvaluing BABA in relation to its projected growth as its PEG ratio is currently above the fair market value of 1. 8.40999984's PEG comes from its forward price to earnings ratio being divided by its growth rate. PEG ratios are one of the most used valuation metrics due to its incorporation of more company fundamentals metrics and a focus on the firm's future rather than its past.

Summary

BABA's valuation metrics are weak at its current price due to a overvalued PEG ratio despite strong growth. BABA's PE and PEG are worse than the market average resulting in a below average valuation score. Click Here to get the full Report on Alibaba Group Holding Ltd - ADR (BABA) stock.

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