Alibaba (BABA) closed the most recent trading day at $170.16, moving +1.89% from the previous trading session. The stock outperformed the S&P 500, which registered a daily loss of 0.53%. Elsewhere, the Dow saw a downswing of 0.09%, while the tech-heavy Nasdaq depreciated by 1%.
Shares of the online retailer have appreciated by 11.87% over the course of the past month, outperforming the Retail-Wholesale sector's gain of 5.07%, and the S&P 500's gain of 2.06%.
Analysts and investors alike will be keeping a close eye on the performance of Alibaba in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $1.91, marking a 34.81% fall compared to the same quarter of the previous year. Our most recent consensus estimate is calling for quarterly revenue of $41.25 billion, up 7.47% from the year-ago period.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $6.1 per share and revenue of $146.41 billion, indicating changes of -32.3% and +5.99%, respectively, compared to the previous year.
Any recent changes to analyst estimates for Alibaba should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, there's been a 5.57% fall in the Zacks Consensus EPS estimate. Alibaba is currently sporting a Zacks Rank of #5 (Strong Sell).
In the context of valuation, Alibaba is at present trading with a Forward P/E ratio of 27.4. This represents a premium compared to its industry average Forward P/E of 17.75.
Meanwhile, BABA's PEG ratio is currently 3.17. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. By the end of yesterday's trading, the Internet - Commerce industry had an average PEG ratio of 1.15.
The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 173, which puts it in the bottom 30% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual 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.
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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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