Alibaba Group operates as an online and mobile commerce company in China, providing internet infrastructure, e-commerce, online financial, and internet content services. The company was founded in 1999 and is based in Hangzhou, China.
BABA Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Alibaba Group Holding Ltd with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Alibaba Group Holding Ltd ranked in the 60th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 40.33%. The most interesting components of our discounted cash flow analysis for Alibaba Group Holding Ltd ended up being:
As a business, BABA is generating more cash flow than 98.93% of positive cash flow stocks in the Technology.
The business' balance sheet suggests that 0% of the company's capital is sourced from debt; this is greater than only 3.65% of the free cash flow producing stocks we're observing.
BABA's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 57.43% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
TAIT, TLS, PCYG, STMP, and UPLD can be thought of as valuation peers to BABA, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
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