Shares of Alibaba Group Holding Ltd (BABA) have seen the needle move 1.66% or 3.05 in the most recent session. The NYSE listed company saw a recent bid of 187.05 on 8413374 volume.
Investing in the stock market can be highly unpredictable. Veteran investors may have spent many years studying the market. At some point along the way, many investors may have had to make some tough decisions. Making the tough stock portfolio decisions can seem like a daunting task, especially if some wrong calls have been made in the past. Investors who are able to quickly learn from previous mistakes may be much better situated if they are able to keep from repeating those mistakes. When just starting out, investors may want to go slow and steady in order to focus on the simpler investing ideas first.
Turning to Return on Assets or ROA, Alibaba Group Holding Ltd (BABA) has a current ROA of 11.78. This is a profitability ratio that measures net income generated from total company assets during a given period. This ratio reveals how quick a company can turn it’s assets into profits. In other words, the ratio provides insight into the profitability of a firm’s assets. The ratio is calculated by dividing total net income by the average total assets.
A higher ROA compared to peers in the same industry, would suggest that company management is able to effectively generate profits from their assets. Similar to the other ratios, a lower number might raise red flags about management’s ability when compared to other companies in a similar sector.
Now let’s take a look at how the fundamentals are stacking up for Alibaba Group Holding Ltd (BABA). Fundamental analysis takes into consideration market, industry and stock conditions to help determine if the shares are correctly valued.
One indicator that can help investors determine if a stock might be a quality investment is the Return on Equity or ROE. Alibaba Group Holding Ltd (BABA) currently has Return on Equity of 21.52. ROE is a ratio that measures profits generated from the investments received from shareholders.
In other words, the ratio reveals how effective the firm is at turning shareholder investment into company profits. A company with high ROE typically reflects well on management and how well a company is run at a high level. A firm with a lower ROE might encourage potential investors to dig further to see why profits aren’t being generated from shareholder money.
Investors may be digging through all of the most recent earnings report trying to locate a few names that are poised to make a run. Investors often take notice when a company beats or misses analyst projections by a wide margin. Once identifying these stocks, investors may want to look back at earnings history over the past few quarters. While one or two sub-par quarters may not be a legitimate cause for alarm, a long string of underperformance may be worth looking into. On the flip side, one or two great quarters may not be telling the complete picture either. Going behind the curtain and investigating the numbers may help the investor locate the next batch of stocks to add to the portfolio.