Alibaba (BABA) Dips More Than Broader Markets: What You Should Know
Alibaba (BABA) closed the most recent trading day at $119.44, moving -0.08% from the previous trading session. This move lagged the S&P 500's daily loss of 0.07%. Elsewhere, the Dow gained 0.31%, while the tech-heavy Nasdaq lost 3.22%.
Coming into today, shares of the online retailer had gained 39.56% in the past month. In that same time, the Retail-Wholesale sector gained 8.58%, while the S&P 500 gained 4.64%.
Wall Street will be looking for positivity from Alibaba as it approaches its next earnings report date. The company is expected to report EPS of $2.25, down 15.09% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $35.85 billion, down 5.83% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $7.20 per share and revenue of $127.62 billion, which would represent changes of -13.36% and -4.24%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Alibaba. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.68% higher within the past month. Alibaba currently has a Zacks Rank of #1 (Strong Buy).
Valuation is also important, so investors should note that Alibaba has a Forward P/E ratio of 16.6 right now. Its industry sports an average Forward P/E of 22.18, so we one might conclude that Alibaba is trading at a discount comparatively.
We can also see that BABA currently has a PEG ratio of 1.31. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BABA's industry had an average PEG ratio of 1.31 as of yesterday's close.
The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 48, which puts it in the top 20% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
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