Alibaba Group Holding Limited (BABA)
Valuation Overview•Is Alibaba Group Holding Limited Overvalued or Undervalued?
Trading at a relative discount to industry peers, suggesting a specific risk premium is applied.
Moderate quality score of 49/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Average quality business weighed down by significant profitability concerns.
Wall Street is highly bullish, projecting significant upside. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
BABA struggles with subpar profitability and pressured margins. This is paired with a moderately leveraged but stable balance sheet.
The company demonstrates solid revenue growth (5.6% 3Y CAGR) paired with robust earnings compounding (17.0% EPS 3Y CAGR). Operating efficiency remains adequate with margins around 5.8%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $243.4B | +2.7% | +5.6% | +7.4% | +26.0% | |
| EBITDA | $1.8B | — | -10.2% | — | — | |
| Net Income | $25.5B | -20.4% | +12.5% | — | +3.8% | |
| EPS (Diluted) | $10.40 | -17.9% | +17.0% | -4.3% | +2.6% | |
| Free Cash Flow | -$18.1B | -164.9% | — | — | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 39.8% | 39.2% | 38.2% | 44.2% |
| Operating Margin | 5.8% | 10.7% | 10.3% | 15.5% |
| Net Margin | 10.1% | 10.6% | 9.5% | 17.4% |
| FCF Margin | -4.9% | 6.3% | 9.7% | 20.4% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $1.02 | $0.09 | -91.2% | ||
| Q1'26 | $1.65 | $1.01 | -38.8% | ||
| Q4'25 | $0.66 | $0.61 | -7.6% | ||
| Q3'25 | $2.13 | $2.06 | -3.3% | ||
| Q2'25 | $1.48 | $1.73 | +16.9% | ||
| Q1'25 | $2.67 | $2.93 | +9.7% | ||
| Q4'24 | $2.07 | $2.15 | +3.9% | ||
| Q3'24 | $2.20 | $2.26 | +2.7% |
Total return is -4.7% (1Y), lagging the benchmark by -29.7%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | -30.6% | -39.9% | — |
| 1Y | -4.7% | -29.7% | +0.9% |
| 3YCAGR | +8.6% | -10.8% | +6.5% |
| 5YCAGR | -11.9% | -24.2% | +2.7% |
| 10YCAGR | +3.7% | -9.7% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Alibaba Group Holding Limited (BABA) valuation, health, and returns.
Alibaba Group Holding Limited is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. trading near fair value (DCF: $92.24)
Alibaba Group Holding Limited has multiple valuation anchors: DCF Intrinsic Value: $92.24 | Peer Relative Fair Value: $565.47 | Wall Street Analyst Target: $189.17 (implying +76.7% upside). A convergence of these signals offers higher conviction.
Alibaba Group Holding Limited displays fair financial health with a composite quality score of 49/100, supported by a Altman Z-Score of 1.2 (distress zone), Piotroski F-Score of 4/9, Return on Invested Capital (ROIC) of 3.8%.
Alibaba Group Holding Limited pays a 1.9% dividend yield, covered by a 33% payout ratio with 1 years of growth, supplemented by a 0.5% buyback yield.
Alibaba Group Holding Limited's current growth trajectory is Decelerating. The company achieved +2.7% 1Y revenue growth and -17.9% 1Y EPS growth, compared to its 3Y revenue CAGR of +5.6%.
Wall Street consensus is Buy based on 59 analysts, beating EPS expectations in 58% of recent quarters with a -4-quarter streak. The consensus price target represents a +76.7% change from current levels.
Investment risks for Alibaba Group Holding Limited include: -43.5% 1-year max drawdown, elevated distress risk. Volatility risk is characterized by a beta of 1.26x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.