Apple Inc. (AAPL)vs Alibaba Group Holding Limited (BABA)

Quick verdict

Apple and Alibaba present contrasting investment profiles. Apple commands a premium valuation, trading at a P/E TTM of 39.4 and P/B of 45.12, underpinned by exceptional profitability: 146.69% ROE, 49.57% ROIC, and 32.64% operating margin. Alibaba is priced far more modestly, with a P/E TTM of 17.79 and P/S of 1.89, but return metrics are weaker, with ROE of 10% and ROIC of 3.17%. Apple's 3-year EPS CAGR of 22.59% contrasts with Alibaba's -17.27% over the same period. Momentum has favoured Alibaba recently, with a 114.86% one-year return versus Apple's 73.53%, though Alibaba's 5-year maximum drawdown of -39.92% was considerably deeper than Apple's -19.47%. The supplied overall scores favour Alibaba (4) over Apple (2), with Apple carrying an A grade for growth and quality against Alibaba's B ratings for valuation and balance sheet.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Apple designs, manufactures, and sells consumer electronics and related services globally, operating within the Technology sector under the Consumer Electronics industry classification. Its business is characterised by high gross margin (47.86%) and net margin (27.15%), reflecting a vertically integrated hardware-and-services ecosystem. Alibaba operates within Consumer Cyclical, specifically Specialty Retail, providing technology infrastructure and marketing channels that enable merchants and brands to reach customers in China and internationally. Alibaba's gross margin of 39.81% is narrower than Apple's, and its operating margin of 5.83% is substantially lower than Apple's 32.64%, indicating a business model with materially different cost structures and margin dynamics despite both companies operating at large scale, with market caps of $4.80 trillion (Apple) versus $288.44 billion (Alibaba).

Valuation

Apple trades at notably higher multiples across the board: P/E TTM of 39.4 versus Alibaba's 17.79, P/E forward of 26.84 versus 22.12, P/S TTM of 10.63 versus 1.89, and P/B of 45.12 versus 1.89. EV/EBITDA also favours Alibaba at 14.03 against Apple's 30.22. Apple's FCF yield of 3.57% is marginally above Alibaba's 3.26%. Apple's PEG ratio of 1.36 suggests its premium is at least partly supported by growth, whereas Alibaba's PEG of -1.01 reflects negative historical EPS growth complicating that metric's interpretation. Both are assigned a valuation grade of B, suggesting the higher absolute multiples on Apple are viewed in the context of its growth and quality profile, while Alibaba's lower multiples are weighed against its own growth and margin challenges.

Growth profile

Apple's growth metrics are considerably stronger over the periods provided. Its 5-year revenue CAGR stands at 29.32% versus Alibaba's 5.29%, though 3-year revenue CAGR is closer, at 6.43% for Apple versus 2.74% for Alibaba. The more pronounced divergence is in earnings: Apple's 3-year EPS CAGR is 22.59% and 5-year EPS CAGR is 39.1%, while Alibaba shows a 3-year EPS CAGR of -17.27% and 5-year EPS CAGR of 3.31%. This supports Apple's A grade for growth against the overall comparison. The data indicates Apple has compounded both revenue and earnings at a considerably faster and more consistent rate across the periods measured, whereas Alibaba's growth has been comparatively muted and, on the 3-year EPS measure, negative.

Profitability and quality

Apple's profitability metrics are markedly stronger across every measure provided. Gross margin of 47.86% compares with Alibaba's 39.81%, operating margin of 32.64% versus 5.83%, and net margin of 27.15% versus 10.12%. The gap widens further in capital efficiency: Apple's ROE of 146.69% and ROIC of 49.57% dwarf Alibaba's ROE of 10% and ROIC of 3.17%. Both companies received a quality grade of A in the overall verdict data despite this gap, though Apple is specifically tagged as high-quality. These figures indicate Apple converts revenue into profit and deploys capital considerably more efficiently than Alibaba on the metrics supplied, a distinction that is central to the valuation premium Apple commands in the market.

Balance-sheet risk

Both companies carry a balance sheet grade of B. Apple holds cash of $67.92 billion against total debt of $76.23 billion, with a net debt/EBITDA of -1.5 and current ratio of 1.07; its interest coverage of 3.19 is comparatively modest. Alibaba holds larger cash reserves of $88.62 billion against total debt of $100.98 billion, with a similar net debt/EBITDA of -2.45, a slightly higher current ratio of 1.28, and materially stronger interest coverage of 38.08. While both firms sit in net-cash positions per their negative net debt/EBITDA figures, Alibaba's interest coverage ratio suggests greater capacity to service debt obligations from earnings, whereas Apple's lower current ratio and interest coverage point to a tighter, though still investment-grade-consistent, liquidity and leverage profile.

Price performance and shareholder returns

Share price performance diverges by timeframe. Apple has returned 58.09% year-to-date and 73.53% over one year, with a 3-year annualised return of 27.16%, though its 5-year annualised return is slightly negative at -0.6%. Alibaba's year-to-date return is -21.83%, but its one-year return of 114.86% and 3-year annualised return of 41.62% exceed Apple's over those windows, alongside a positive 5-year annualised return of 6.48%. Risk profiles differ too: Apple's beta of 1.097 is close to market average, while Alibaba's beta of 0.496 suggests lower historical volatility relative to the market, despite Alibaba's steeper maximum 5-year drawdown of -39.92% compared with Apple's -19.47%. Both are given a momentum grade of B.

Which stock fits which investor

Based on the supplied verdicts, Apple is flagged as best suited to investors prioritising growth and quality, consistent with its A grades in both categories and its high-quality style tag, supported by superior margins, ROE, ROIC, and multi-year EPS growth. Alibaba is flagged as best suited to investors prioritising value and income, consistent with its lower valuation multiples (P/E TTM 17.79, P/B 1.89), dividend yield of 0.88%, and buyback yield of 3.2%, alongside its mature style tag. The overall score favours Alibaba (4) over Apple (2) in this dataset, though this reflects the specific weighting applied rather than a universal conclusion, and the two companies otherwise differ substantially in growth trajectory, margin structure, and volatility characteristics as detailed above.

• Value: BABA
• Growth: AAPL
• Income: BABA
• Quality: AAPL

Frequently asked questions

Which stock is cheaper on valuation metrics?

Alibaba trades at lower multiples across the board, including a P/E TTM of 17.79 versus Apple's 39.4, P/S of 1.89 versus 10.63, and P/B of 1.89 versus 45.12, indicating a more modest valuation on these measures.

Which company has grown faster?

Apple shows stronger growth across most measures, with a 5-year revenue CAGR of 29.32% versus Alibaba's 5.29% and a 3-year EPS CAGR of 22.59% versus Alibaba's -17.27%.

Which company is more profitable?

Apple leads on all profitability metrics provided, including net margin of 27.15% versus Alibaba's 10.12%, ROE of 146.69% versus 10%, and ROIC of 49.57% versus 3.17%.

How do their balance sheets compare?

Both hold a B balance sheet grade and sit in net-cash positions, but Alibaba shows stronger interest coverage at 38.08 versus Apple's 3.19, while Apple's current ratio of 1.07 is slightly below Alibaba's 1.28.

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