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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 $166.82, marking a -0.7% move from the previous day. This change lagged the S&P 500's 0.34% gain on the day.

Coming into today, shares of the online retailer had gained 4.97% in the past month. In that same time, the Retail-Wholesale sector lost 1.38%, while the S&P 500 lost 0.12%.

Wall Street will be looking for positivity from BABA as it approaches its next earnings report date. In that report, analysts expect BABA to post earnings of $1.95 per share. This would mark a year-over-year decline of 26.42%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32 billion, up 40.12% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.15 per share and revenue of $140.83 billion, which would represent changes of -7.95% and +31.51%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for BABA. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 has moved 7.39% lower within the past month. BABA is holding a Zacks Rank of #5 (Strong Sell) right now.

Digging into valuation, BABA currently has a Forward P/E ratio of 18.37. This valuation marks a discount compared to its industry's average Forward P/E of 57.34.

We can also see that BABA currently has a PEG ratio of 1.18. 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 2.48 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 171, which puts it in the bottom 33% 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.

To follow BABA in the coming trading sessions, be sure to utilize Zacks.com.


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