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

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Alibaba (BABA - Free Report) closed at $241.89 in the latest trading session, marking a -0.87% move from the prior day. This move lagged the S&P 500's daily gain of 0.33%.

Heading into today, shares of the online retailer had lost 3.69% over the past month, lagging the Retail-Wholesale sector's gain of 1.31% and the S&P 500's gain of 4.77% in that time.

BABA will be looking to display strength as it nears its next earnings release. On that day, BABA is projected to report earnings of $1.92 per share, which would represent year-over-year growth of 47.69%. Meanwhile, our latest consensus estimate is calling for revenue of $27.95 billion, up 73.13% from the prior-year quarter.

Investors should also note any recent changes to analyst estimates for BABA. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.17% lower. BABA is currently a Zacks Rank #4 (Sell).

Digging into valuation, BABA currently has a Forward P/E ratio of 19.12. This valuation marks a discount compared to its industry's average Forward P/E of 63.64.

Investors should also note that BABA has a PEG ratio of 1.04 right now. 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. Internet - Commerce stocks are, on average, holding a PEG ratio of 2.39 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 216, which puts it in the bottom 15% 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.

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


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