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Alibaba (BABA) Gains But Lags Market: What You Should Know

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Alibaba (BABA - Free Report) closed at $166.05 in the latest trading session, marking a +0.52% move from the prior day. This move lagged the S&P 500's daily gain of 0.64%. Elsewhere, the Dow gained 0.57%, while the tech-heavy Nasdaq added 0.6%.

Heading into today, shares of the online retailer had lost 6.19% over the past month, lagging the Retail-Wholesale sector's loss of 4.12% and the S&P 500's loss of 1.87% in that time.

Investors will be hoping for strength from BABA as it approaches its next earnings release. The company is expected to report EPS of $1.56, up 11.43% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $16.82 billion, up 35.65% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.18 per share and revenue of $73.46 billion. These totals would mark changes of +25.52% and +32.09%, respectively, from last year.

Investors should also note any 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.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. BABA is currently sporting a Zacks Rank of #1 (Strong Buy).

In terms of valuation, BABA is currently trading at a Forward P/E ratio of 23. This valuation marks a discount compared to its industry's average Forward P/E of 24.38.

We can also see that BABA currently has a PEG ratio of 0.82. 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 1.51 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 69, which puts it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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


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