Here is What You Should Know:
Alibaba($Alibaba(09988)$ ) has recently been on list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Earnings Estimate Revisions
Alibaba is expected to post earnings of $1.70 per share for the current quarter, representing a year-over-year change of -33.9%. Over the last 30 days.
For the current fiscal year, the consensus earnings estimate of $7.24 points to a change of -12.9% from the prior year. Over the last 30 days, this estimate has remained unchanged.
For the next fiscal year, the consensus earnings estimate of $8.68 indicates a change of +19.9% from what Alibaba is expected to report a year ago. Over the past month, the estimate has remained unchanged.
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
12-month consensus EPS estimate for BABA
Revenue Growth Forecast
While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
In the case of Alibaba, the consensus sales estimate of $31.38 billion for the current quarter points to a year-over-year change of -1.5%. The $139.02 billion and $157.59 billion estimates for the current and next fiscal years indicate changes of +4.3% and +13.4%, respectively.
Last Reported Results and Surprise History
Alibaba reported revenues of $32.19 billion in the last reported quarter, representing a year-over-year change of +12.5%. EPS of $1.25 for the same period compares with $1.58 a year ago.
Compared to the Consensus Estimate of $30.54 billion, the reported revenues represent a surprise of +5.39%. The EPS surprise was +17.92%.
Over the last four quarters, Alibaba surpassed consensus EPS estimates three times. The company topped consensus revenue estimates just once over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
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