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What's in the Offing for Alibaba (BABA) in Q1 Earnings?

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Alibaba Group Holding Limited (BABA - Free Report) is set to report first-quarter fiscal 2022 results on Aug 3.

For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at $2.18 per share, indicating growth of 3.8% from the prior-year quarter’s reported figure.

The consensus mark for the same is pegged at $32.7 billion, which suggests growth of 50.1% from the year-ago quarter’s reported figure.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, while missing the same once, the average surprise being 7.53%.

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’s strong efforts to add value to consumers and sellers through product enrichment efforts and platform innovations are expected to have driven growth in its e-commerce business in the to-be-reported quarter by driving its customer momentum.

New monetization formats and strengthening online physical goods GMV on China retail marketplaces are expected to have aided customer management revenues of the company in the quarter under review.

The growing momentum across paying members on 1688.comis expected to have been a tailwind for the China commerce wholesale business in the fiscal first quarter.

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

Well-performing Lazada and Trendyol are likely to have aided the performance of Alibaba’s International commerce retail business in the quarter under review.

Solid momentum across members on the alibaba.com platform coupled with robust cross-border-related value-added services is expected to have contributed well to the International commerce wholesale business’s growth in the fiscal first quarter.

In addition to e-commerce business strength, the company’s growing cloud segment is expected to have contributed well to the fiscal first-quarter performance of Alibaba.

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

The company’s increasing regulatory concerns are anticipated to have been major headwinds in the to-be-reported 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 -1.20% and a Zacks Rank #4, currently.

Stocks to Consider

Here are some stocks that you may also consider as our model shows that these have the right combination of elements to beat on earnings this season.

Agilent Technologies (A - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #2 at present.

Avnet (AVT - Free Report) has an Earnings ESP of +9.82% and it sports a Zacks Rank of 1 at present.

CyberArk Software (CYBR - Free Report) has an Earnings ESP of +37.93% 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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