Just curious what everyone thinks of BABA after the earnings report today. For those who are interested and/or are shareholders, what do you think of today’s report?
\- I appreciate the attention to the share buy back program. According my calculations, the stock is undervalued
\- Revenue nuts over the last few years
\- Profit margins seem consistent even though revenue has jumped (costs have gone up as well).
\- Looks like Net Income is struggling. Selling / Admin Expenses / R&D are eating into the bottom line
\- EPS (diluted) is down which mirrors the drop in net income (and they increased shares in 2020 but are now buying them back )
\-3x Cash on hand to debt and the Interest Coverage ratio is 18. Debt payments are easily managed.
\- Plenty of Free Cash Flow with CapEX averaging around 6B
​
Price Targets
\- Yahoo Finance Analysts (Mid Price based on 42 Analysts) – $116.73
​
\- Graham’s Evaluation – $89.45
Assumptions – 7.10 TTM EPS, 6.6% Growth next year (yahoo finance), current AAA Corp Bond 4.75%
​
\- Dividend Discount Model – $109.00
Assumptions – 9% Growth rate (payout is 10% according to Seeking Alpha), Discount rate of 10%
​
\- Discounted Free Cash Flow – $177.11
Assumptions – 3% FCF Growth, Perpetual Growth Rate of 2.5%, and a Discount Rate of 10%
​
Average Price = $98.46 (with a 20% Margin of Safety Built in)
​
Thoughts on this? Anyone get anything different?
​
​
​
