A Closer Look at Alibaba’s Valuation after Fiscal 1Q18
Shareholder returns and stock trends
Alibaba (BABA) generated investor returns of 6.8% in the trailing-one-month period and 77.1% in the trailing-12-month period. The company’s stock price declined 0.56% in the trailing-five-day period.
Amazon (AMZN), eBay (EBAY), Baidu (BIDU), and PayPal (PYPL)—Alibaba’s peer companies in the Internet sector—generated returns of 23.0%, 11.2%, 26.8%, and 60.8%, respectively, in the trailing-12-month period.
Interested in BABA? Don't miss the next report.
Receive e-mail alerts for new research on BABA
Examining Alibaba’s cash flow metrics
Alibaba (BABA) has $22.5 billion of cash in hand. Its price-to-cash-flow and price-to-free-cash-flow multiples are 31.4x and 32.5x, respectively. For the trailing 12 months, the company’s EV-to-cash-flow multiple was 31.3x, and its EV-to-free-cash-flow multiple was 32.1x.
Relative strength index
For the last 14 days, Alibaba reported an RSI (relative strength index) of 64 compared to 33, 30, 35, and 56 recorded by Amazon, eBay, Baidu, and PayPal, respectively, within the same period. The RSI readings measures the speed and change at which stock prices move.
The moving average refers to the average price of a stock over a given period of time. On August 28, 2017, Alibaba (BABA) closed the trading day at $219.99. Based on this figure, here’s how the stock fared in terms of its moving averages:
- ~60.6% above its 100-day moving average of $137.00
- ~43.8% above its 50-day moving average of $153.00
- ~36.6% above its 20-day moving average of $161.00
The moving average convergence divergence (or MACD) refers to the difference between a stock’s long-term and short-term moving averages. Alibaba’s MACD was ~5.2 in the last 14 days.
Alibaba’s peers Amazon, eBay, Baidu, and PayPal reported MACD readings of ~10.4, -0.22, ~7.0, and 0.84, respectively.
Earnings and sales
Alibaba’s earnings per share (or EPS) for 2016 resulted from total sales of $25.8 billion, which rose 56% annually.