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

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Alibaba (BABA - Free Report) closed at $164.77 in the latest trading session, marking a -0.81% move from the prior day. This move lagged the S&P 500's daily loss of 0.04%. At the same time, the Dow added 0.33%, and the tech-heavy Nasdaq lost 0.51%.

Coming into today, shares of the online retailer had lost 3.69% in the past month. In that same time, the Retail-Wholesale sector gained 1.63%, while the S&P 500 gained 2.79%.

Investors will be hoping for strength from BABA as it approaches its next earnings release, which is expected to be November 1, 2018. In that report, analysts expect BABA to post earnings of $1.25 per share. This would mark a year-over-year decline of 3.1%. Meanwhile, our latest consensus estimate is calling for revenue of $12.95 billion, up 56.29% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.69 per share and revenue of $57.83 billion. These totals would mark changes of +8.59% and +50.9%, respectively, from last year.

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

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 14.04% lower. BABA currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that BABA has a Forward P/E ratio of 29.17 right now. This represents a discount compared to its industry's average Forward P/E of 29.66.

We can also see that BABA currently has a PEG ratio of 0.84. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BABA's industry had an average PEG ratio of 2.13 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 208, putting it in the bottom 18% 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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