Alibaba share Price and Earnings per Share

Alibaba Graham Defensive Analysis:

SECTOR: [PASS][FAIL]  Alibaba is neither dependant on one niche technology nor a financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Alibaba's sales of $130 000 million, based on 2022 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Alibaba's current ratio $78 000m/€53 000m of 1.5 just fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Alibaba's is $34 000 million, while the net current assets are $38 000 million. Alibaba fails this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Alibaba's EPS growth over that period of 2,300% easily passes the EPS growth test.

EARNINGS YIELD: [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Alibaba's E/P of 11% (using this years's number) passes this test.

Peter Lynch "VALUE":  [PASS]   

Dividend: Alibaba now pays a $1 dividend: 1,4%

Conclusion: January 2022 at 130 USD: Alibaba is hoping to grow revenue by more than 20% this year and expand to 2 billion customers. Seems like a buy for a growth investors and almost for a Graham Defensive Investor. A buy for an intelligent investor. There is China country risk.

December 2023: Lockdowns ended after last October in China when the share price dipped to around $60. The country is opening up (slowly). Disclaimer: I own Alibaba shares through ValueMachinesFund