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

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Alibaba (BABA - Free Report) closed the most recent trading day at $102.46, moving +1% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.22%. At the same time, the Dow lost 0.13%, and the tech-heavy Nasdaq gained 0.2%.

Prior to today's trading, shares of the online retailer had gained 15.69% over the past month. This has outpaced the Retail-Wholesale sector's loss of 6.7% and the S&P 500's loss of 8.32% in that time.

Investors will be hoping for strength from Alibaba as it approaches its next earnings release. On that day, Alibaba is projected to report earnings of $1.70 per share, which would represent a year-over-year decline of 33.85%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.38 billion, down 1.53% from the year-ago period.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $7.24 per share and revenue of $139.02 billion. These results would represent year-over-year changes of -12.88% and +4.32%, respectively.

It is also important to note the recent changes to analyst estimates for Alibaba. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 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 2.61% lower. Alibaba is currently a Zacks Rank #3 (Hold).

Digging into valuation, Alibaba currently has a Forward P/E ratio of 14.01. This valuation marks a discount compared to its industry's average Forward P/E of 21.78.

Investors should also note that BABA has a PEG ratio of 1.49 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. The Internet - Commerce industry currently had an average PEG ratio of 1.08 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 217, 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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