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

In the latest trading session, Alibaba (BABA) closed at $128.30, marking a -1.16% move from the previous day. This change lagged the S&P 500's daily loss of 0.14%. At the same time, the Dow lost 0.45%, and the tech-heavy Nasdaq lost 0.02%.

Coming into today, shares of the online retailer had gained 3.8% in the past month. In that same time, the Retail-Wholesale sector lost 4.76%, while the S&P 500 lost 0.13%.

Alibaba will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.60, down 23.08% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $39.37 billion, up 16.19% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.36 per share and revenue of $134.82 billion, which would represent changes of -15.9% and +25.9%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Alibaba. These revisions help to show the ever-changing nature of near-term business trends. 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. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Alibaba currently has a Zacks Rank of #5 (Strong Sell).

Digging into valuation, Alibaba currently has a Forward P/E ratio of 15.53. This valuation marks a discount compared to its industry's average Forward P/E of 31.3.

We can also see that BABA currently has a PEG ratio of 1. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Commerce stocks are, on average, holding a PEG ratio of 1.45 based on yesterday's closing prices.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 187, putting it in the bottom 27% 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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