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Alibaba (BABA) Stock Sinks As Market Gains: What You Should Know

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Alibaba (BABA - Free Report) closed the most recent trading day at $93.50, moving -1.28% from the previous trading session. This change lagged the S&P 500's 1.61% gain on the day. Elsewhere, the Dow gained 1.45%, while the tech-heavy Nasdaq added 0.36%.

Heading into today, shares of the online retailer had lost 8.57% over the past month, lagging the Retail-Wholesale sector's loss of 3.96% and the S&P 500's loss of 1.42% in that time.

Investors will be hoping for strength from Alibaba as it approaches its next earnings release. On that day, Alibaba is projected to report earnings of $1.06 per share, which would represent a year-over-year decline of 32.91%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.11 billion, up 8.76% from the year-ago period.

Any recent changes to analyst estimates for Alibaba should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 3.34% higher within the past month. Alibaba currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, Alibaba is holding a Forward P/E ratio of 12.74. Its industry sports an average Forward P/E of 23.89, so we one might conclude that Alibaba is trading at a discount comparatively.

It is also worth noting that BABA currently has a PEG ratio of 1.36. 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. Internet - Commerce stocks are, on average, holding a PEG ratio of 1.36 based on yesterday's closing prices.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 223, putting it in the bottom 12% 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.

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


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