do you have questions about how to analyze stock check out this video where we're going to break
down the fundamentals of a company that we follow and invest in Alibaba it seems like every day
you hear something new about amazon or Jeff Bezos flying into space but what about Alibaba a similar
e-commerce giant in china Alibaba just launched a new server chip to boost its cloud business
in challenge to amazon and Microsoft the best part is that the stock is falling nearly 57 from its
hey guys it's amber and Jerad here from holy city family our goal here is to empower you to achieve
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make sure to hit the subscribe button and the bell to receive our weekly videos so let's start with a
quick overview of Alibaba. Alibaba group holding limited provides technology infrastructure and
marketing reach to merchants brands retailers and other businesses to engage with their users and
customers in the people's republic of china and internationally trading at 41.4 below our estimate
of its fair value and its earnings are forecast to grow 13.48 per year according to the snowflake
analysis from simply wall street Alibaba looks strong in value and in health future and past
looks a little weak at the moment Alibaba does not offer a dividend which is typical for most
growth stocks like this so as of October 19 2021 the share price for Alibaba is around 177 dollars
a share in the past year Alibaba's price has dropped over 45 percent and 20 percent of that
decrease was in the last three months okay now for a look at the latest news here's the first
headline Alibaba unveils one of china's most advanced chips Alibaba group holding
limited unveiled a new server chip that's based on advanced 5 nanometer technology making a milestone
in chip development in china and this is what we were talking about in the beginning where this is
going to give Microsoft and apple a run for their money so be interesting to see how that plays out
next is Alibaba's stock is ready to make its big comeback before this fallout and we can attest
to this we've been watching Alibaba and adding to our position over the past six months to a year as
it's fallen i believe it fell 57 from its previous all-time high and so yes it is definitely due for
a major comeback and it already has been bouncing back i think a little bit after this article was
written so the last article you see here is from seeking alpha and it states four reasons Alibaba
could more than triple over the next five years analysts actually expect the company to deliver
around 220 in returns or 24 annually with a five times the risk-adjusted expected return of the s p
historically Alibaba has grown at like 14 of its worth which is 26 times their earnings it
trades at 15.8 and under 12 including cash the one interesting thing is it's 41 undervalued and
it's a classic Buffett quote-unquote fat pitch so check it out next we look at valuation finbox.com
shows Alibaba's fair value at 257 dollars with the medium level uncertainty leaving 49
upside potential from the current price from 45 analyst targets Alibaba's target price is 249
when it comes to valuation we actually look at a number of different methods to calculate the
fair value for stocks that we track when we look at this like when you look at Finbox they actually
define that fair value as the real or underlying intrinsic worth of a company and they use over
12 different models to calculate that fair value and also show a confidence level for each of those
here's a breakdown of future growth the first chart you see is Alibaba's earnings forecast
the three lines represent high mean and low the average three year earnings forecast is 12
which is a 42 increase the second chart you see here is Alibaba's revenue forecast and like we
said before the three lines represent high mean and low and now we're looking at it in terms of
revenue so the average three-year revenue forecast is 206 billion which is a 74 percent increase
let's take a look at past performance the first chart shows the past earnings growth for Alibaba
over the last year Alibaba has grown 12 percent compared to the industry which is also at 12
in the market which has seen a 19 growth and the second chart you see here shows us the
past revenue growth for Alibaba over the last year Alibaba has grown over 20 compared to the industry
at 16 growth and the market had a 12 growth next we look at the financial health of Alibaba
the overall score according to Finbox is great and this is based on over 100 different factors that
Finbox considers when scoring and for the section below they give it a b in cash flow and growth
a c in price momentum and relative value and an a in profit with management we like to look at
several categories but in particular we like to look at the average tenure of management
the board members the CEO and the leadership here you can see Alibaba's average tenure for
their management team is six years and we like to compare that to apple which is four years
and then Microsoft for six years okay here's the breakdown of company ownership so institutions
are at 40 percent general public at 32 percent public companies 25 percent and insiders 3 so
just to give you a frame of reference we wanted to show how that compares to companies like apple and
Microsoft apple has institutional ownership at 53 the general public owns 42 and public
companies own five percent Microsoft institutions own 72 percent and the general public owns 28
now that we've gone through our analysis of Alibaba we hope that this gives you a
better understanding of the company and you can make more better informed investment decisions
we plan to do a similar stock analysis for all the stocks on our watch list but if you're interested
in a particular company let us know and we'll try to do that we'll try to push that to the front of
the list for you throughout the analysis we've shared some great tools and resources with you
such as wall street zen simply wall street and Finbox we believe it's really important to get
stock information from multiple sources to get the most accurate and up-to-date information if
you have tools and resources that you use we'd love for you to share in the comments below
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all of our videos are for informational purposes only and do not constitute financial
advice please do your own research consult a certified and trusted financial planner
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