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Alibaba (BABA) Dips More Than Broader Markets: What You Should Know

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Zacks Equity Research
·3 min read
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Alibaba (BABA) closed the most recent trading day at $258.62, moving -0.53% from the previous trading session. This change lagged the S&P 500's daily loss of 0.3%. Elsewhere, the Dow lost 0.57%, while the tech-heavy Nasdaq added 0.09%.

Prior to today's trading, shares of the online retailer had gained 17.12% over the past month. This has outpaced the Retail-Wholesale sector's gain of 1.92% and the S&P 500's gain of 4.43% in that time.

BABA will be looking to display strength as it nears its next earnings release, which is expected to be February 2, 2021. The company is expected to report EPS of $3.16, up 21.07% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $32 billion, up 37.99% from the year-ago period.

BABA's full-year Zacks Consensus Estimates are calling for earnings of $9.99 per share and revenue of $105.10 billion. These results would represent year-over-year changes of +33.56% and +44.51%, respectively.

Investors should also note any recent changes to analyst estimates for BABA. 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 company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 2.03% lower. BABA is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note BABA's current valuation metrics, including its Forward P/E ratio of 26.04. This valuation marks a discount compared to its industry's average Forward P/E of 50.8.

Meanwhile, BABA's PEG ratio is currently 1.33. 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. BABA's industry had an average PEG ratio of 2.65 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 218, putting it in the bottom 15% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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Zacks Investment Research