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Alibaba (BABA) to Report Q4 Earnings: What's in the Cards?

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Alibaba Group Holding Limited (BABA - Free Report) is set to report fourth-quarter fiscal 2021 results on May 13.

For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.91 per share, indicating growth of 46.9% from the prior-year quarter’s reported figure.

The consensus mark for the same is pegged at $27.9 billion, which suggests growth of 17.9% from the year-ago quarter’s reported figure.

The company’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 23.23%.

Alibaba Group Holding Limited Price and EPS Surprise

 

Alibaba Group Holding Limited Price and EPS Surprise

Alibaba Group Holding Limited price-eps-surprise | Alibaba Group Holding Limited Quote

Factors to Consider

Alibaba’sstrong efforts to add value to consumers and sellers through the consumer segment, product enrichmentand platform innovations are expected to have driven growth in its e-commerce business in the to-be-reported quarter by driving its customer momentum.

Further, the infusion of advanced technologies along with increasing validation for Taobao and Tmall portals is expected to have beenbeneficial in the quarter to be reported. Moreover, the application of Big Data and AI into the company’s e-commerce platform is anticipated tohave continued helping it in delivering enhanced customer experience.

Additionally, well-performing Lazada and Trendyolare likely to have aided the performance of Alibaba’sInternational commerce retail business in the quarter under review.

Also, the increasing number of paying members on the alibaba.com platform coupled with solid momentum across cross-border-related value-added services isexpected to have contributed well to the International commerce wholesale business’s growth in the fiscal fourth quarter.

Apart from e-commerce, the company’s robust cloud segment is expected to have sustained its momentum inthe fiscal fourth quarter on growing number of paying customers and higher-than-usual spending by them.

Additionally, Alibabahas been building the online marketing inventory on both mobile and PC as well as recording higher monetization rates. This isexpectedto have boosted itsprofits in the quarter under discussion.

However, we note that the company has been spending heavily in new areas of core online retail business, including supermarkets, stores, new artificial intelligence, digital entertainment and cloud computing businesses. These increased expenses are expected to getreflectedin Alibaba’s fiscal fourth-quarter results.

Further, increasing competition from companies like Amazon (AMZN - Free Report) and JD.com (JD - Free Report) as well as the deceleration of growth in the e-commerce market — both domestically and internationally — are expected tohave impacted its earnings in the soon-to-be-reported quarter.

Furthermore, Alibaba’s increasing regulatory concerns are anticipated to have been major headwinds in the fiscal fourth quarter.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Alibaba this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Alibaba has an Earnings ESP of +0.24% and a Zacks Rank #5, currently.

Stock to Consider

Here is a company, which has the right combination of elements to post an earnings beat this quarter:

Pure Storage (PSTG - Free Report) has an Earnings ESP of +10.81% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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