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

Zacks Equity Research

Alibaba (BABA) closed the most recent trading day at $165.77, moving +0.38% from the previous trading session. This change outpaced the S&P 500's 1.79% loss on the day. Elsewhere, the Dow lost 1.86%, while the tech-heavy Nasdaq lost 1.56%.

Prior to today's trading, shares of the online retailer had lost 4.21% over the past month. This has lagged the Retail-Wholesale sector's loss of 1.17% and the S&P 500's gain of 0.72% 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 $1.56 per share. This would mark year-over-year growth of 11.43%. Meanwhile, our latest consensus estimate is calling for revenue of $16.82 billion, up 35.65% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.18 per share and revenue of $73.46 billion, which would represent changes of +25.52% and +32.09%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for BABA. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. Within the past 30 days, our consensus EPS projection remained stagnant. BABA is holding a Zacks Rank of #1 (Strong Buy) right now.

Investors should also note BABA's current valuation metrics, including its Forward P/E ratio of 22.99. This represents a discount compared to its industry's average Forward P/E of 24.73.

Meanwhile, BABA's PEG ratio is currently 0.82. 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 industry currently had an average PEG ratio of 1.52 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 110, putting it in the top 44% 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.


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