What to expect from the quarterly results of Alibaba (BABA) – November 1, 2018

Alibaba shares (Baba – Free Report) jumped 6.3% during trading hours, indicating that investors could expect big things from the quarterly financial results of China's central e-commerce center Friday, Friday. That said, BABA shares have fallen more than 16% in the last six months, some fearing for its Amazon –AMZN – Free Report) as expenses, among other things.

Alibaba Overview

Alibaba records a quarterly turnover up 61%, reaching $ 12.23 billion. The company, which operates three core digital commerce platforms, has deepened its activities in cloud computing to compete with Microsoft (MSFT – Free report), IBM (IBM – Free report), Google (GOOGL – Free report) and Amazon.

Alibaba, however, remains an online seller first, with e-commerce accounting for about 85% of the revenues of the past period. That said, many investors are now concerned that the ongoing trade war between the two largest economies in the world, combined with the fact that China's economic expansion has only recently reached its lowest rate since the financial crisis, actually hurt Alibaba.

And let's not forget that Jack Ma announced in September his intention to retire soon. Add all this to Alibaba's expenses, and it seems that the BABA stock could be in trouble. But let's see if a turnaround could be expected based on our latest quarterly projections.

The projections

Alibaba's quarterly revenue is expected to be 52.7% to $ 12.65 billion, based on our current estimate of the Zacks consensus. At the same time, BABA's adjusted quarterly profit is expected to fall by about 13.2% to $ 1.12 per share. However, we still need to know what is the probability that Alibaba exceeds our quarterly earnings estimates, as this could have an impact on BABA trading in the near term.

Fortunately, we can turn to our exclusive ESP earnings figure to help us discover it. Zacks Earnings ESP (Planned Surprise Forecast) compares the most accurate estimate to the Zacks consensus estimate for the quarter. The most accurate estimate is a version of the Zacks consensus whose definition is related to change.

In fact, when an analyst publishes an estimate just before the publication of his results, it means that he has recent information that could potentially be more accurate than what analysts thought would be accurate. a company two or three months ago.

A positive earnings ESP combined with a rank 3 (Hold) Zacks ranking helps us to have confidence in the possibility of a win gain. In fact, our 10-year backtest revealed that this methodology produced a positive surprise in 70% of cases.

Alibaba is currently ranked 3rd in Zacks (Hold) and has an ESP profit of -3.28%. Unfortunately, this means that our model is inconclusive. However, it should be noted that BABA has missed our estimates of quarterly results in four of the last six quarters, including the last three periods.

Alibaba is expected to release its financial results for the September quarter before the market opens on Friday.

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