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What do the Fundamentals Predict for Alibaba Group Holding Ltd - ADR (BABA) Stock?

Wednesday, June 30, 2021 03:00 PM | InvestorsObserver Analysts

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What do the Fundamentals Predict for Alibaba Group Holding Ltd - ADR (BABA) Stock?

Alibaba Group Holding Ltd - ADR (BABA) receives a strong valuation ranking of 80 from InvestorsObserver's data analysis. The proprietary ranking system focuses on the underlying health of a company through analysis of its stock price, earnings, and growth rate. BABA has a better value than 80% of stocks based on these valuation analytics. Investors primarily focused on buy-and-hold strategies will find the valuation ranking relevant to their goals when making investment decisions.

Valuation Rank - 80
BABA gets a 80 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 28.6 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's 12-month-forward PE to Growth (PEG) ratio of 1.37 is considered a poor value as the market is overvaluing BABA in relation to the company's projected earnings growth due. BABA's PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company's overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.

Summary

All together these valuation metrics paint a pretty poor picture for BABA at its current price due to a overvalued PEG ratio despite strong growth. The PE and PEG for BABA are worse than the average of the market resulting in a valuation score of 80.

Click Here to get the full Stock Score Report on Alibaba Group Holding Ltd - ADR (BABA) Stock.

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