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Alibaba (BABA) Gains As Market Dips: What You Should Know

Zacks Equity Research

Alibaba (BABA) closed at $177.10 in the latest trading session, marking a +1.03% move from the prior day. This move outpaced the S&P 500's daily loss of 0.2%. Meanwhile, the Dow lost 0.08%, and the Nasdaq, a tech-heavy index, lost 0.3%.

Heading into today, shares of the online retailer had lost 2.07% over the past month, lagging the Retail-Wholesale sector's loss of 1.56% and the S&P 500's loss of 0.25% in that time.

BABA will be looking to display strength as it nears its next earnings release. In that report, analysts expect BABA to post earnings of $1.56 per share. This would mark year-over-year growth of 11.43%. Meanwhile, our latest consensus estimate is calling for revenue of $16.76 billion, up 35.16% from the prior-year quarter.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $7.18 per share and revenue of $73.58 billion. These results would represent year-over-year changes of +25.52% and +32.3%, 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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. The Zacks Consensus EPS estimate remained stagnant within the past month. BABA is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note BABA's current valuation metrics, including its Forward P/E ratio of 24.4. For comparison, its industry has an average Forward P/E of 24.4, 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 0.87. 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 103, which puts it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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

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