Alibaba (BABA) closed at $144.11 in the latest trading session, marking a -2.66% move from the prior day. This move lagged the S&P 500's daily loss of 0.43%. On the other hand, the Dow registered a loss of 1.05%, and the technology-centric Nasdaq decreased by 0.92%.
Heading into today, shares of the online retailer had lost 15.04% over the past month, lagging the Retail-Wholesale sector's loss of 5.44% and the S&P 500's loss of 0.5%.
The investment community will be closely monitoring the performance of Alibaba in its forthcoming earnings report. The company is expected to report EPS of $1.91, down 34.81% from the prior-year quarter. Meanwhile, the latest consensus estimate predicts the revenue to be $41.26 billion, indicating a 7.49% increase compared to the same quarter of the previous year.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $5.96 per share and revenue of $147.73 billion, indicating changes of -33.85% and +6.95%, respectively, compared to the previous year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Alibaba. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
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 0.28% lower. Currently, Alibaba is carrying a Zacks Rank of #5 (Strong Sell).
In the context of valuation, Alibaba is at present trading with a Forward P/E ratio of 24.84. This expresses a premium compared to the average Forward P/E of 15.88 of its industry.
One should further note that BABA currently holds a PEG ratio of 2.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The average PEG ratio for the Internet - Commerce industry stood at 0.94 at the close of the market yesterday.
The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 174, finds itself in the bottom 29% echelons 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.
You can find more information on all of these metrics, and much more, on Zacks.com.
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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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