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

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Zacks Equity Research
·3 min read
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Alibaba (BABA) closed the most recent trading day at $260.76, moving +0.2% from the previous trading session. This move lagged the S&P 500's daily gain of 0.98%. At the same time, the Dow added 0.99%, and the tech-heavy Nasdaq gained 0.5%.

BABA will be looking to display strength as it nears its next earnings release, which is expected to be February 2, 2021. In that report, analysts expect BABA to post earnings of $3.10 per share. This would mark year-over-year growth of 18.77%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.14 billion, up 38.6% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.94 per share and revenue of $105.53 billion. These totals would mark changes of +32.89% and +45.11%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for BABA. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate has moved 1.93% lower. BABA is currently a Zacks Rank #4 (Sell).

Looking at its valuation, BABA is holding a Forward P/E ratio of 27.78. Its industry sports an average Forward P/E of 49.8, so we one might conclude that BABA is trading at a discount comparatively.

Meanwhile, BABA's PEG ratio is currently 1.42. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Internet - Commerce stocks are, on average, holding a PEG ratio of 3.27 based on yesterday's closing prices.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 216, putting it in the bottom 16% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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