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Alibaba (BABA) Dips More Than Broader Markets: What You Should Know

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Alibaba (BABA) closed at $163 in the latest trading session, marking a -0.58% move from the prior day. This move lagged the S&P 500's daily loss of 0.24%.

Heading into today, shares of the online retailer had lost 0.88% over the past month, outpacing the Retail-Wholesale sector's loss of 5% and the S&P 500's loss of 2.12% in that time.

Investors will be hoping for strength from BABA as it approaches its next earnings release. In that report, analysts expect BABA to post earnings of $1.95 per share. This would mark a year-over-year decline of 26.42%. Meanwhile, our latest consensus estimate is calling for revenue of $32 billion, up 40.12% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.15 per share and revenue of $140.83 billion. These totals would mark changes of -7.95% and +31.51%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for BABA. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 7.39% lower. BABA is currently sporting a Zacks Rank of #5 (Strong Sell).

Valuation is also important, so investors should note that BABA has a Forward P/E ratio of 17.92 right now. This represents a discount compared to its industry's average Forward P/E of 53.72.

Investors should also note that BABA has a PEG ratio of 1.16 right now. 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. The Internet - Commerce was holding an average PEG ratio of 2.36 at yesterday's closing price.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 173, putting it in the bottom 32% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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