Dissecting Alibaba’s debt situation
Alibaba’s (BABA) balance sheet reflects total debt of $13.3 billion. The company reported total capital of ~$60.4 billion, and its total-debt-to-total-capital ratio is 22%. The company’s debt-to-asset, debt-to-equity, and debt-to-EBITDA[1. earnings before interest, tax, depreciation, and amortization] ratios work out to 0.18x, 32.9x, and 1.5x, respectively.
Delving deeper into the company’s debt ratios, you can see that Alibaba has an EBIT-to-interest ratio of 71.2x. This indicates a company’s ability to pay interest on outstanding debt. The company has a debt-to-enterprise value of 3%.
Deciphering Alibaba’s comprehensive valuations
Alibaba (BABA) has an enterprise value of ~$393.5 billion. Its peers Amazon (AMZN), Baidu (BIDU), eBay (EBAY), and PayPal (PYPL) have enterprise values of ~$486.1 billion, ~$65.7 billion, ~$41.2 billion, and ~$68.2 billion, respectively.
Alibaba’s EV-to-adjusted-EBITDA[2. enterprise value to adjusted earnings before interested, tax, depreciation, and amortization] multiple for the trailing 12 months is 42.1x. Its EV-to-estimated-EBITDA multiple for 2017 is 25.6x.
Alibaba’s EV-to-sales ratio for the trailing 12 months is 16.8x, while its EV-to-sales ratio is expected to be 8.7x in 2017.
Inside Alibaba’s price metrics
With a book value per share of ~$16.30, Alibaba is trading at a price-to-book value of 9.3x. The estimated book value per share of the stock is ~$21.50 for 2017.
For 2017, the price-to-sales ratio for Alibaba is 16.8x, and its estimated price-to-sales ratio is 11.5x.
On July 27, 2017, Alibaba was the second-largest global Internet player in terms of market capitalization at ~$394.8 billion. In comparison, its peers have the following market cap levels:
- Amazon: ~$499.9 billion
- Baidu: ~$69.8 billion
- eBay: ~$38.7 billion
- PayPal: ~$72.3 billion
Alibaba’s credit rating
Moody’s rating on Alibaba’s debt is A1. The company also has an S&P debt rating and debt outlook of A+ and “stable,” respectively.