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Alibaba (BABA) Outpaces Stock Market Gains: What You Should Know

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In the latest trading session, Alibaba (BABA) closed at $105.13, marking a +1.13% move from the previous day. This move outpaced the S&P 500's daily gain of 0.99%. Meanwhile, the Dow gained 0.51%, and the Nasdaq, a tech-heavy index, lost 0.31%.

Prior to today's trading, shares of the online retailer had lost 1.13% over the past month. This has lagged the Retail-Wholesale sector's gain of 10.59% and the S&P 500's gain of 7.91% in that time.

Investors will be hoping for strength from Alibaba as it approaches its next earnings release. In that report, analysts expect Alibaba to post earnings of $1.50 per share. This would mark a year-over-year decline of 41.63%. Our most recent consensus estimate is calling for quarterly revenue of $31.02 billion, down 2.66% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.11 per share and revenue of $138.13 billion. These totals would mark changes of -14.44% and +3.65%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Alibaba. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, 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 has moved 0.24% lower within the past month. Alibaba is currently a Zacks Rank #3 (Hold).

Investors should also note Alibaba's current valuation metrics, including its Forward P/E ratio of 14.62. This valuation marks a discount compared to its industry's average Forward P/E of 24.31.

We can also see that BABA currently has a PEG ratio of 1.56. 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. The Internet - Commerce industry currently had an average PEG ratio of 1.22 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 132, putting it in the bottom 48% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report

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