Alibaba (BABA) closed the most recent trading day at $85.50, moving -0.74% from the previous trading session. This change lagged the S&P 500's 0.12% gain on the day. Meanwhile, the Dow gained 0.13%, and the Nasdaq, a tech-heavy index, lost 4.09%.
Prior to today's trading, shares of the online retailer had lost 1.99% over the past month. This has lagged the Retail-Wholesale sector's gain of 4.5% and the S&P 500's gain of 3.98% in that time.
Investors will be hoping for strength from Alibaba as it approaches its next earnings release. On that day, Alibaba is projected to report earnings of $1.86 per share, which would represent year-over-year growth of 6.29%. Our most recent consensus estimate is calling for quarterly revenue of $31.27 billion, up 1.89% from the year-ago period.
BABA's full-year Zacks Consensus Estimates are calling for earnings of $7.92 per share and revenue of $135.54 billion. These results would represent year-over-year changes of -0.25% and +7.53%, respectively.
It is also important to note the recent changes to analyst estimates for Alibaba. Recent revisions tend to reflect the latest near-term business trends. 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. 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.
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. The Zacks Consensus EPS estimate has moved 5.08% lower within the past month. Alibaba is holding a Zacks Rank of #4 (Sell) right now.
In terms of valuation, Alibaba is currently trading at a Forward P/E ratio of 10.88. For comparison, its industry has an average Forward P/E of 19.3, which means Alibaba is trading at a discount to the group.
It is also worth noting that BABA currently has a PEG ratio of 0.8. 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. The Internet - Commerce industry currently had an average PEG ratio of 0.99 as of yesterday's close.
The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 68, putting it in the top 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.
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