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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 $102.44, marking a -1.27% move from the previous day. This move lagged the S&P 500's daily gain of 1.92%. Elsewhere, the Dow gained 2.15%, while the tech-heavy Nasdaq added 0.16%.

Prior to today's trading, shares of the online retailer had gained 2.28% over the past month. This has lagged the Retail-Wholesale sector's gain of 4% and outpaced the S&P 500's gain of 1.54% in that time.

Wall Street will be looking for positivity from Alibaba as it approaches its next earnings report date. In that report, analysts expect Alibaba to post earnings of $1.70 per share. This would mark a year-over-year decline of 33.85%. Our most recent consensus estimate is calling for quarterly revenue of $31.02 billion, down 2.66% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.33 per share and revenue of $138.13 billion, which would represent changes of -11.79% and +3.65%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Alibaba. These recent revisions tend to reflect the evolving nature of short-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. 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 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.24% lower. Alibaba is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Alibaba's current valuation metrics, including its Forward P/E ratio of 14.15. This represents a discount compared to its industry's average Forward P/E of 21.32.

Investors should also note that BABA has a PEG ratio of 1.51 right now. 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 was holding an average PEG ratio of 1.13 at yesterday's closing price.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 157, putting it in the bottom 38% 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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