Alibaba Stock Shines Among Growth Investor Strategies

Alibaba Group Holding Ltd (BABA) has garnered a 69% rating under the Growth Investor model, reflecting strong earnings growth metrics. Despite some shortcomings, the stock exhibits potential for professional investors seeking growth opportunities.

Date: 27-05-2025

AI Rating: 6

Alibaba Group Holding Ltd (BABA) has emerged as a significant high scorer within the Growth Investor model, achieving a 69% rating based on its underlying fundamentals and valuation criteria. **Earnings Per Share (EPS)** growth is particularly robust, as indicated by the current quarter's positive earnings growth rate and its performance relative to the prior three quarters. Additionally, the EPS growth for the current quarter has outpaced the company's historical growth rate, suggesting a momentary improvement and potentially favorable conditions for stock performance in the short term. However, the stock does face some concerns, primarily reflected in its **sales growth rate**, which failed to meet the criteria defined in the strategy. This could indicate challenges in sustaining revenue growth momentum moving forward. Moreover, risks are highlighted by the failures in **earnings persistence** and **long-term EPS growth**, indicating potential volatility in expected earnings performance over time. While the current quarter's results are promising, these long-term issues could limit investor confidence, especially from a growth-oriented perspective. The P/E ratio of BABA indicates that it is reasonably valued, which is a positive sign considering the competitive landscape of the Retail (Specialty) industry. Another favorable aspect is the low **total debt/equity ratio**, suggesting sound financial health and less risk of leverage-related issues for the company. Insider transactions also point to positive signals, implying that internal stakeholders have confidence in the company's future. In summary, while Alibaba provides a solid short-term opportunity with significant EPS growth and reasonable valuation metrics, there are critical concerns regarding revenue stability and long-term earnings growth. These factors create a complex scenario for professional investors, especially those focusing on mid-term engagements.

Stocks: BABA