U.S. Markets closed

Alibaba (BABA) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Alibaba (BABA) closed at $169.92, marking a +0.02% move from the previous day. This move lagged the S&P 500's daily gain of 0.29%. At the same time, the Dow added 0.17%, and the tech-heavy Nasdaq gained 0.19%.

Prior to today's trading, shares of the online retailer had lost 0.97% over the past month. This has lagged the Retail-Wholesale sector's loss of 0.13% and the S&P 500's gain of 0.32% in that time.

Investors will be hoping for strength from BABA as it approaches its next earnings release, which is expected to be November 1, 2019. In that report, analysts expect BABA to post earnings of $1.54 per share. This would mark year-over-year growth of 10%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $16.73 billion, up 34.95% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.12 per share and revenue of $73.66 billion. These totals would mark changes of +24.48% and +32.45%, respectively, from last year.

Investors might also notice 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Over the past month, the Zacks Consensus EPS estimate has moved 1.51% lower. BABA is currently a Zacks Rank #3 (Hold).

In terms of valuation, BABA is currently trading at a Forward P/E ratio of 23.85. For comparison, its industry has an average Forward P/E of 23.85, which means BABA is trading at a no noticeable deviation to the group.

We can also see that BABA currently has a PEG ratio of 0.88. 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 1.51 at yesterday's closing price.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 68, which puts it in the top 27% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.