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

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In the latest trading session, Alibaba (BABA) closed at $176.17, marking a -0.86% move from the previous day. This move lagged the S&P 500's daily gain of 0.48%.

Heading into today, shares of the online retailer had gained 22.48% over the past month, outpacing the Retail-Wholesale sector's gain of 1.4% and the S&P 500's gain of 3.46% in that time.

BABA will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.95, down 26.42% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32 billion, up 40.12% from the year-ago period.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $9.15 per share and revenue of $140.83 billion. These results would represent year-over-year changes of -7.95% and +31.51%, respectively.

Any recent changes to analyst estimates for BABA should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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. The Zacks Consensus EPS estimate has moved 7.39% lower within the past month. BABA is currently a Zacks Rank #5 (Strong Sell).

In terms of valuation, BABA is currently trading at a Forward P/E ratio of 19.43. Its industry sports an average Forward P/E of 57.26, so we one might conclude that BABA is trading at a discount comparatively.

Investors should also note that BABA has a PEG ratio of 1.25 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Commerce stocks are, on average, holding a PEG ratio of 2.43 based on yesterday's closing prices.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 152, which puts it in the bottom 41% 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.

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


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