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Assessing Alibaba Group Holding Limited's (NYSE:BABA) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess BABA's recent performance announced on 31 March 2019 and evaluate these figures to its longer term trend and industry movements.
How BABA fared against its long-term earnings performance and its industry
BABA's trailing twelve-month earnings (from 31 March 2019) of CN¥88b has jumped 37% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 17%, indicating the rate at which BABA is growing has accelerated. What's the driver of this growth? Let's see whether it is only due to an industry uplift, or if Alibaba Group Holding has seen some company-specific growth.
In terms of returns from investment, Alibaba Group Holding has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 5.0% is below the US Online Retail industry of 6.4%, indicating Alibaba Group Holding's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Alibaba Group Holding’s debt level, has declined over the past 3 years from 9.5% to 8.1%.
What does this mean?
Though Alibaba Group Holding's past data is helpful, it is only one aspect of my investment thesis. While Alibaba Group Holding has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Alibaba Group Holding to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BABA’s future growth? Take a look at our free research report of analyst consensus for BABA’s outlook.
- Financial Health: Are BABA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.