It’s time to talk about one of the most popular names in the market. Here is the breakdown of $BABA, otherwise known as Alibaba.
Current Price: $275.85
52/Wk High: $319.32
52/Wk Low: $169.95
Market Cap: $757.5 billion
Read below for the breakdown!
Alibaba is a major holding company in which provides a digital platform and marketing base to help brands, merchants, and many more businesses find, interact and sell to customers around the globe.
Alibaba is a Chinese based company and is best known for its retail and wholesale platform that competes with the likes of Amazon and JD.com.
Taking a look at the stock price itself, the price can be broken down by company segment according to TREFIS (@trefis) research.
Firstly, according to TREFIS, 66.65% of Alibaba’s stock price is based on their China Retail segment.
Secondly, 9.63% is based on their China Wholesale & Other segment, 6.1% on their Cloud Computing segment, 3.9% on their International Commerce segment, 2.0% on their Digital Media & Innovation Initiatives segment, and finally 11.7% is based on cash.
Shifting into the financials and most recent earnings report Alibaba continues to see consistent growth the upside.
In the most recent earnings report, Q2 2021, Alibaba reported a beat with an EPS of CNY 17.97, exceeding the analyst’s consensus estimate of CNY 14.08.
Furthermore, Alibaba saw solid growth under the hood as well, reporting Q2 revenues of $22.838 billion, representing a 30% year over year jump.
The company also reported that annual active consumers within the China retail market places hit 757 million consumers total, representing a jump of 15 million consumers from the reported 12 months period that ended June 30, 2020.
When it comes to income, Alibaba reported a Q2 non-GAAP net income of $6.935 billion and an adjusted non-GAAP EBITDA of $7.000 billion, representing 28% growth year over year.
On the downside, operating income did significantly decline by 33% to $2.008 billion. Although it is important to note that this decline according to management was due to an increase in share-based compensation expenses.
From a balance sheet side of things, Alibaba continues to show strength as well.
Total Debt: CNY 121.788 billion
Total Liabilities: CNY 568.190 billion
Total Assets: CNY 1.433626 trillion
Cash & Short Term Inv: CNY 410.703 billion
When it comes to valuation though, Alibaba is not badly priced.
Price to Earnings: 26.07x
Price to Sales: 8.43x
Price to Book: 5.68x
Price to Cash Flow: 21.08x
Given the numbers, the analysts remain very bullish on Alibaba with the mean price target currently sitting at $338.47/share, representing a 22.68% gain.
Furthermore, Alibaba’s high price target is $365.00/share, representing a 32.30% gain, while the low price target is $290.00/share, representing a 5.11% gain.
The big money on the otherhand is not quite as involved, with only 44.62% of Alibaba being owned by institutions. Top holders include The Vanguard Group, T. Rowe Price Associates, and BlackRock Institutional Trust.
Taking a look at the technicals Alibaba could be presenting an opportunity of late after its most recent pullback. According to the six-month charts, the MACD is in the midst of a turn back to the upside around -7.40.
The six-month charts are also indicating an RSI of 47.75 and CCI of -9.61 both of which are neither great nor bad. On a final technical note, Alibaba trades roughly 43 points off its highs.
Overall I like Alibaba and with the now nearly confirmed presidential election I expect the stock to move higher given likely better China relations under the next US administration.
In short, I like Alibaba at its current price and put a buy rating on the stock based on likely growth throughout the next few years, it’s solid financial standing, and better China relations to come.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.