TheStreet Ratings quantitative stock model maintains a Buy recommendation on Alibaba Group (BABA) . Since the stock was upgraded to Buy from Hold on March 21, 2017, the shares have risen by as much as 76%.
All the stocks covered by TheStreet Ratings are evaluated daily by our quantitative model reviewing both fundamental analysis of the latest financial statements and technical analysis of share movements. The technically strong stock performance today increases the likelihood that shares of Alibaba Group may be able to move from the Good rating level of B to the A rating level of Excellent.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate ALIBABA GROUP HLDG as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings goes as follows:
- BABA's very impressive revenue growth greatly exceeded the industry average of 24.8%. Since the same quarter one year prior, revenues leaped by 90.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, ALIBABA GROUP HLDG's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 75.71% to $2,896.20 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 34.89%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- ALIBABA GROUP HLDG's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ALIBABA GROUP HLDG increased its bottom line by earning $3.91 versus $2.48 in the prior year. This year, the market expects an improvement in earnings ($40.71 versus $3.91).
- You can view the full analysis from the report here: BABA
-- Reported by Kevin Baker in Palm Beach Gardens, FL