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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 $175, marking a -0.94% move from the previous day. This move lagged the S&P 500's daily loss of 0.24%. Meanwhile, the Dow lost 0.3%, and the Nasdaq, a tech-heavy index, lost 0.58%.

Coming into today, shares of the online retailer had gained 5.48% in the past month. In that same time, the Retail-Wholesale sector gained 3.75%, while the S&P 500 gained 4.96%.

Wall Street will be looking for positivity from BABA as it approaches its next earnings report date. On that day, BABA is projected to report earnings of $1.56 per share, which would represent year-over-year growth of 11.43%. Our most recent consensus estimate is calling for quarterly revenue of $16.82 billion, up 35.65% from the year-ago period.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $7.18 per share and revenue of $73.46 billion. These results would represent year-over-year changes of +25.52% and +32.09%, respectively.

Investors might also notice recent changes to analyst estimates for BABA. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. The Zacks Consensus EPS estimate remained stagnant within the past month. BABA is currently a Zacks Rank #1 (Strong Buy).

Valuation is also important, so investors should note that BABA has a Forward P/E ratio of 24.59 right now. For comparison, its industry has an average Forward P/E of 28.51, which means BABA is trading at a discount to the group.

We can also see that BABA currently has a PEG ratio of 0.88. 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. Internet - Commerce stocks are, on average, holding a PEG ratio of 1.52 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 107, which puts it in the top 42% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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