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

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Alibaba (BABA - Free Report) closed at $151.89 in the latest trading session, marking a +1.14% move from the prior day. This move outpaced the S&P 500's daily gain of 0.95%.

Heading into today, shares of the online retailer had lost 12.53% over the past month, lagging the Retail-Wholesale sector's gain of 0.55% and the S&P 500's loss of 1.87% in that time.

Investors will be hoping for strength from BABA as it approaches its next earnings release. In that report, analysts expect BABA to post earnings of $2.11 per share. This would mark a year-over-year decline of 20.38%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.55 billion, up 42.52% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.73 per share and revenue of $142.27 billion. These totals would mark changes of -2.11% and +32.86%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for BABA. These revisions help to show the ever-changing nature of 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. Within the past 30 days, our consensus EPS projection remained stagnant. BABA is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that BABA has a Forward P/E ratio of 15.44 right now. This represents a discount compared to its industry's average Forward P/E of 50.57.

It is also worth noting that BABA currently has a PEG ratio of 1. 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 2.16 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 220, which puts it in the bottom 14% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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