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Alibaba (BABA) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Alibaba (BABA - Free Report) closed at $77.87, marking a -1.32% move from the previous day. This change lagged the S&P 500's daily loss of 0.21%. Elsewhere, the Dow lost 0.43%, while the tech-heavy Nasdaq added 0.01%.

Prior to today's trading, shares of the online retailer had lost 18.31% over the past month. This has lagged the Retail-Wholesale sector's loss of 9.13% and the S&P 500's loss of 9.7% in that time.

Wall Street will be looking for positivity from Alibaba as it approaches its next earnings report date. On that day, Alibaba is projected to report earnings of $1.66 per share, which would represent a year-over-year decline of 4.6%. Our most recent consensus estimate is calling for quarterly revenue of $31.89 billion, up 2.39% from the year-ago period.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $7.64 per share and revenue of $136.59 billion. These results would represent year-over-year changes of -8.06% and +2.5%, respectively.

Investors might also notice recent changes to analyst estimates for Alibaba. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. Alibaba is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Alibaba's current valuation metrics, including its Forward P/E ratio of 10.33. For comparison, its industry has an average Forward P/E of 22.99, which means Alibaba is trading at a discount to the group.

Investors should also note that BABA has a PEG ratio of 1.1 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 was holding an average PEG ratio of 1.11 at yesterday's closing price.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 141, which puts it in the bottom 45% 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.

To follow BABA in the coming trading sessions, be sure to utilize Zacks.com.


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