How Alibaba’s Fundamentals Stack Up



Deciphering Alibaba’s comprehensive valuation

Alibaba (BABA) has an EV (enterprise value) of $434.2 billion. Peer companies Amazon (AMZN), PayPal (PYPL), eBay (EBAY), and Alphabet (GOOG) have an EV of ~$453.4 billion, ~$80.8 billion, ~$42.5 billion, and ~$589.6 billion, respectively.

Alibaba’s adjusted EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple for the trailing 12 months is 42.2x. Its estimated EV-to-EBITDA multiple is 26.4x. Alibaba’s EBITDA margin for 2017 is 38%.

Its EV-to-sales multiple for the trailing 12 months is 16.8x, while its EV-to-sales multiple is expected to be 9.1x in 2018. Alibaba’s trailing-12-month EV-to-cash-flow and trailing-12-month EV-to-free-cash-flow multiples are 31.8x and 32.5x, respectively.

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Dissecting Alibaba’s debt situation

The company has short-term debt of $2.4 billion and long-term debt of $11.3 billion, making its total debt $13.8 billion. With a total capital of $64.6 billion, its total-debt-to-total-capital multiple is 21.3%.

It has debt-to-equity, debt-to-assets, and debt-to-EBITDA multiples of 31.3x, 0.17x, and 1.4x, respectively. The company’s interest coverage multiple is 79.0x, and its debt-to-enterprise multiple is 3%.

Inside Alibaba’s price metrics

With a book value per share of $17.40, Alibaba is trading at price-to-book value of 9.6x. The stock’s estimated book value per share for 2018 is $21.90. Alibaba’s price-to-sales multiple is 16.4x, while its estimated price-to-sales multiple for 2018 is 12.4x.

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EBITDA measures in focus

Alibaba’s EBITDA of $10.1 billion are expected to fall 26% in 2018 to $16.5 billion. The stock is trading at price-to-EBITDA multiple of 43.3x.

Understanding Alibaba’s earnings and sales

Alibaba’s 2017 EPS (earnings per share) are $2.60, stemming from its total revenue of $25.8 billion. In 2018, revenue is expected to be $47.8 billion, with EPS of $4.90.


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