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Will Alibaba (BABA) Q4 Earnings Top on E-Commerce Growth?
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Alibaba Group Holding Limited (BABA - Free Report) is set to report fourth-quarter fiscal 2018 results on May 4. Last quarter, the Chinese e-commerce giant delivered a negative earnings surprise of 1.21%.
The surprise history has been decent in Alibaba’s case. The company surpassed estimates in two of the trailing four quarters, with an average four-quarter positive surprise of 11.39%.
Coming to price performance, on a 12-month basis, the company’s shares have rallied 53% compared with the industry’s gain of 44.6%.
Strength in Alibaba’s Core E-Commerce Business
This segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. Revenues in the last reported fiscal third quarter were RMB73.2 billion (US$11.3 billion), increasing 57% year over year. Revenues are expected to further increase, driven by innovation in data technology, widespread application of big data, and increasing validation for Taobao and Tmall portals.
Strong Mobile Growth
In the fiscal third quarter, Mobile Monthly Active Users (MAU) were 580 million, reflecting an increase of 18% from the prior-year quarter and 6% sequentially. The number is expected to expand further, driving revenues for the company. This is because of the increased adoption of mobile devices by consumers as the primary method of accessing Alibaba’s platforms.
Additionally, over the past few quarters, Alibaba has been witnessing an increase in monetization rates. The company is building its online marketing inventory on both mobile and PC, and likely to continue witnessing higher monetization rates, thereby increasing profits of the company.
Growing Cloud Momentum
In the last reported fiscal third quarter, revenues were RMB3.6 billion (US$553 million), increasing 104% year over year. Additionally, Alibaba Cloud launched 396 new products and features to enable small and large enterprises, for achieving higher computing performance and storage capability.
The figure is expected to further increase in the to-be-reported quarter, driven by an increase in the number of paying customers and higher-than-usual spending by them, reflecting increased usage of services.
Overhangs Remain
Concerns remain in the form of rising expenses associated with new business initiatives, increasing logistics and order-fulfillment costs. Also, the company is willing to spend plenty of cash on its entertainment and media units, which management has identified as key growth drivers outside of its core e-commerce business.
Also, increasing competition from companies like Amazon.com Inc. (AMZN) and Jd.com (JD) among others, and deceleration of growth in the e-commerce market both domestically and internationally could impact results in the soon-to-be-reported quarter.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided, especially when the company is witnessing negative estimate revisions.
Alibabahas a Zacks Rank #3 and an Earnings ESP of -2.89%, which does not indicate a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Alibaba Group Holding Limited Price and EPS Surprise
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank of 2. The company is slated to report quarterly results on May 3.
FLEETCOR Technologies, Inc. has an Earnings ESP of +0.79% and a Zacks Rank #2. The company will report quarterly numbers on May 3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Will Alibaba (BABA) Q4 Earnings Top on E-Commerce Growth?
Alibaba Group Holding Limited (BABA - Free Report) is set to report fourth-quarter fiscal 2018 results on May 4. Last quarter, the Chinese e-commerce giant delivered a negative earnings surprise of 1.21%.
The surprise history has been decent in Alibaba’s case. The company surpassed estimates in two of the trailing four quarters, with an average four-quarter positive surprise of 11.39%.
Coming to price performance, on a 12-month basis, the company’s shares have rallied 53% compared with the industry’s gain of 44.6%.
Strength in Alibaba’s Core E-Commerce Business
This segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. Revenues in the last reported fiscal third quarter were RMB73.2 billion (US$11.3 billion), increasing 57% year over year. Revenues are expected to further increase, driven by innovation in data technology, widespread application of big data, and increasing validation for Taobao and Tmall portals.
Strong Mobile Growth
In the fiscal third quarter, Mobile Monthly Active Users (MAU) were 580 million, reflecting an increase of 18% from the prior-year quarter and 6% sequentially. The number is expected to expand further, driving revenues for the company. This is because of the increased adoption of mobile devices by consumers as the primary method of accessing Alibaba’s platforms.
Additionally, over the past few quarters, Alibaba has been witnessing an increase in monetization rates. The company is building its online marketing inventory on both mobile and PC, and likely to continue witnessing higher monetization rates, thereby increasing profits of the company.
Growing Cloud Momentum
In the last reported fiscal third quarter, revenues were RMB3.6 billion (US$553 million), increasing 104% year over year. Additionally, Alibaba Cloud launched 396 new products and features to enable small and large enterprises, for achieving higher computing performance and storage capability.
The figure is expected to further increase in the to-be-reported quarter, driven by an increase in the number of paying customers and higher-than-usual spending by them, reflecting increased usage of services.
Overhangs Remain
Concerns remain in the form of rising expenses associated with new business initiatives, increasing logistics and order-fulfillment costs. Also, the company is willing to spend plenty of cash on its entertainment and media units, which management has identified as key growth drivers outside of its core e-commerce business.
Also, increasing competition from companies like Amazon.com Inc. (AMZN) and Jd.com (JD) among others, and deceleration of growth in the e-commerce market both domestically and internationally could impact results in the soon-to-be-reported quarter.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided, especially when the company is witnessing negative estimate revisions.
Alibabahas a Zacks Rank #3 and an Earnings ESP of -2.89%, which does not indicate a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Alibaba Group Holding Limited Price and EPS Surprise
Alibaba Group Holding Limited Price and EPS Surprise | Alibaba Group Holding Limited Quote
Stocks to Consider
You may consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank.
Mastercard Incorporated (MA - Free Report) has an Earnings ESP of +0.03% and a Zacks Rank #2. The company is slated to report quarterly numbers on May 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
WEX Inc. (WEX - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank of 2. The company is slated to report quarterly results on May 3.
FLEETCOR Technologies, Inc. has an Earnings ESP of +0.79% and a Zacks Rank #2. The company will report quarterly numbers on May 3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>