Time to buy BABA?
Due to the recent drop in Net Income, BABA’s $Alibaba(BABA.US$ PE ratio of 134 times seems to be ridiculously high. However, this won’t be an accurate representation of Baba’s true earnings capacity and valuation, as the earnings have been distorted due to investment losses.
If earnings can be relied on, we can use ratios like P/B and Price/Forward Earnings as a good gauge. Right now, both ratio is significantly lower than their 5-Yr Average, which could mean BABA is presenting a good value for entry.
Another great way of putting BABA’s valuation into perspective will be by looking at the company’s stock price since its IPO.
In 2014, Alibaba IPO'd at $92.70 a share. And close to 10 years of growth, right now the stock is trading at $100 per share. It literally means that we can buy it at near IPO prices except with 15x the revenue, 5x the EBITDA, 4.5x the free cash flow, and 3.5x the operating income.
In all aspects, BABA looks like a steal for me.
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Matthew D : Well said. Great opportunity for all longs to hop on the train. Over ten years, business demonstrated resilience and consistent profits.
thatwaswho : that time was oct 22
101610448 :