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

Alibaba (BABA) closed at $120.25 in the latest trading session, marking a -1.81% move from the prior day. This change lagged the S&P 500's 0.87% loss on the day. Elsewhere, the Dow lost 0.08%, while the tech-heavy Nasdaq lost 0.43%.

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Coming into today, shares of the online retailer had lost 24.21% in the past month. In that same time, the Retail-Wholesale sector lost 4.65%, while the S&P 500 gained 0.7%.

Investors will be hoping for strength from Alibaba as it approaches its next earnings release. The company is expected to report EPS of $2.60, down 23.08% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $39.37 billion, up 16.19% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.36 per share and revenue of $135.25 billion, which would represent changes of -15.9% and +26.3%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Alibaba. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 past month, the Zacks Consensus EPS estimate has moved 12.49% lower. Alibaba is currently a Zacks Rank #5 (Strong Sell).

Digging into valuation, Alibaba currently has a Forward P/E ratio of 14.65. This represents a discount compared to its industry's average Forward P/E of 50.27.

It is also worth noting that BABA currently has a PEG ratio of 0.95. 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. Internet - Commerce stocks are, on average, holding a PEG ratio of 2.14 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 225, putting it in the bottom 12% 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.

To follow BABA in the coming trading sessions, be sure to utilize Zacks.com.

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