In the latest trading session, Alibaba (BABA) closed at $167.69, marking a -1.61% move from the previous day. This move lagged the S&P 500's daily gain of 0.17%. At the same time, the Dow lost 0.48%, and the tech-heavy Nasdaq gained 0.46%.
Shares of the online retailer have depreciated by 9.36% over the course of the past month, underperforming the Retail-Wholesale sector's gain of 0.84%, and the S&P 500's gain of 2.38%.
Market participants will be closely following the financial results of Alibaba in its upcoming release. On that day, Alibaba is projected to report earnings of $0.66 per share, which would represent a year-over-year decline of 69.3%. In the meantime, our current consensus estimate forecasts the revenue to be $34.43 billion, indicating a 2.17% growth compared to the corresponding quarter of the prior year.
For the full year, the Zacks Consensus Estimates are projecting earnings of $6.57 per share and revenue of $144.67 billion, which would represent changes of -27.08% and +4.73%, respectively, from the prior year.
Investors should also take note of any recent adjustments to analyst estimates for Alibaba. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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 last 30 days, the Zacks Consensus EPS estimate has moved 14.18% lower. Alibaba is currently a Zacks Rank #5 (Strong Sell).
In the context of valuation, Alibaba is at present trading with a Forward P/E ratio of 25.93. Its industry sports an average Forward P/E of 22.35, so one might conclude that Alibaba is trading at a premium comparatively.
It's also important to note that BABA currently trades at a PEG ratio of 2.04. 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. By the end of yesterday's trading, the Internet - Commerce industry had an average PEG ratio of 1.49.
The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 152, which puts it in the bottom 39% of all 250+ industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. 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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Alibaba Group Holding Limited (BABA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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