What Are Analysts Saying About The Future Of Alibaba Group Holding Limited's (NYSE:BABA) Business?

The latest earnings announcement Alibaba Group Holding Limited's (NYSE:BABA) released in September 2017 signalled that the company endured a major headwind with earnings falling by -38.88%. Below, I've laid out key numbers on how market analysts perceive Alibaba Group Holding's earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. View our latest analysis for Alibaba Group Holding

Market analysts' consensus outlook for the upcoming year seems optimistic, with earnings increasing by a robust 21.87%. This growth seems to continue into the following year with rates reaching double digit 60.79% compared to today’s earnings, and finally hitting CN¥143,146.5M by 2020.

Although it’s informative knowing the growth rate each year relative to today’s figure, it may be more valuable to determine the rate at which the company is growing on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Alibaba Group Holding's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 26.92%. This means, we can expect Alibaba Group Holding will grow its earnings by 26.92% every year for the next few years.

Next Steps:

For Alibaba Group Holding, I've put together three important factors you should further examine:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

2. Valuation: What is BABA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BABA is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BABA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.