Alibaba (BABA) closed the most recent trading day at $118.37, moving -1.59% from the previous trading session. This change lagged the S&P 500's daily gain of 0.06%. At the same time, the Dow added 0.28%, and the tech-heavy Nasdaq lost 0.1%.
The online retailer's stock has dropped by 9.17% in the past month, falling short of the Retail-Wholesale sector's loss of 2.65% and the S&P 500's loss of 4.29%.
Analysts and investors alike will be keeping a close eye on the performance of Alibaba in its upcoming earnings disclosure. The company's earnings per share (EPS) are projected to be $1.48, reflecting a 5.71% increase from the same quarter last year. Meanwhile, the latest consensus estimate predicts the revenue to be $33.08 billion, indicating a 7.64% increase compared to the same quarter of the previous year.
Investors should also take note of any recent adjustments to analyst estimates for Alibaba. Recent revisions tend to reflect the latest near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.
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, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.2% higher. Alibaba is holding a Zacks Rank of #2 (Buy) right now.
In terms of valuation, Alibaba is presently being traded at a Forward P/E ratio of 10.98. This signifies a discount in comparison to the average Forward P/E of 23.44 for its industry.
It's also important to note that BABA currently trades at a PEG ratio of 0.36. 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. As of the close of trade yesterday, the Internet - Commerce industry held an average PEG ratio of 1.39.
The Internet - Commerce industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 145, placing it within the bottom 42% of over 250 industries.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the 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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