Alibaba (BABA) ended the latest trading day at $74.55, showing a +1.64% change from the previous day’s close. The stock outperformed the S&P 500’s daily gain of 0.77%. Elsewhere in the market, the Dow gained 0.49%, while the tech-heavy Nasdaq added 0.95%.
Heading into today, shares of the online retailer had lost 17.16% over the past month, while the Retail-Wholesale sector had gained 0.04%, while the S&P 500 had gained 3.71% in that same time period.
Analysts and investors will be closely watching Alibaba’s performance in its upcoming earnings disclosure. In that report, analysts expect Alibaba to post earnings of $2.24 per share, down 6.67% from the same period last year. At the same time, our latest consensus estimate is calling for revenue of $34.95 billion, representing an increase of 8.22% year over year.
Our Zacks Consensus Estimates are projecting earnings of $8.20 per share and revenue of $138.63 billion for the full year, which would represent changes of -4.87% and +6.23%, respectively, from the prior year.
Additionally, investors should also pay attention to any recent revisions to analyst estimates for Alibaba. Recent revisions tend to reflect recent near-term business trends, so positive estimate revisions can be interpreted as a good sign for the company’s business outlook.
Empirical research shows that these estimate revisions are directly correlated with future stock price movements, and investors can take advantage of this by using the Zacks Rank, whose model takes these estimate revisions into account and delivers a simple, actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has a remarkable, third-party-audited, track record of outperformance, with #1 ranked stocks generating an average annual return of +25% since 1988. Within the past 30 days, the Zacks Consensus EPS estimate has moved 1.21% higher. Alibaba currently carries a Zacks Rank #3 (Hold).
In terms of valuation, Alibaba is currently trading with a Forward P/E ratio of 8.95, which means it is undervalued compared to its industry’s average Forward P/E of 19.58.
Meanwhile, BABA’s PEG ratio is currently at 0.38. The PEG ratio is similar to the commonly used P/E ratio, but this metric also incorporates a company’s expected earnings growth rate. Internet – Commerce was holding an average PEG ratio of 0.94 as of yesterday’s closing price.
The Internet – Commerce industry belongs to the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 83, putting it in the top 33% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our industry groups by determining the average Zacks Rank of the individual stocks that make up the groups, and our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to follow all of these stock-moving metrics, and more, on Zacks.com.
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Alibaba Group Holding Limited (BABA): Free Stock Analysis Report
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