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

Zacks Equity Research
Positive Development on Trade Front

Alibaba (BABA) closed at $138.40 in the latest trading session, marking a +0.29% move from the prior day. This move lagged the S&P 500's daily gain of 0.86%. At the same time, the Dow added 1.14%, and the tech-heavy Nasdaq gained 0.38%.

Heading into today, shares of the online retailer had lost 13.39% over the past month, lagging the Retail-Wholesale sector's loss of 7.03% and the S&P 500's loss of 7.55% in that time.

BABA will be looking to display strength as it nears its next earnings release, which is expected to be February 7, 2019. In that report, analysts expect BABA to post earnings of $1.64 per share. This would mark year-over-year growth of 0.61%. Our most recent consensus estimate is calling for quarterly revenue of $17.25 billion, up 35.18% from the year-ago period.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $5.18 per share and revenue of $54.91 billion. These results would represent year-over-year changes of -1.15% and +43.27%, respectively.

Any recent changes to analyst estimates for BABA should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. BABA is currently a Zacks Rank #3 (Hold).

Investors should also note BABA's current valuation metrics, including its Forward P/E ratio of 26.63. Its industry sports an average Forward P/E of 25.37, so we one might conclude that BABA is trading at a premium comparatively.

Meanwhile, BABA's PEG ratio is currently 0.85. 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. BABA's industry had an average PEG ratio of 1.83 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 205, which puts it in the bottom 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.

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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