Will Alibaba Group (BABA) Beat Earnings Estimates In Q2?
Zacks Investment Research | Oct 30, 2016 09:43PM ET
We expect Alibaba Group (NYSE:BABA) to beat expectations when it reports second-quarter fiscal 2017 results on Nov 2.
Why a Likely Positive Surprise?
Our proven model shows that Alibaba Group is likely to beat on earnings because it has the right combination of the two key ingredients.
Zacks ESP: Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Alibaba Group has a Zacks Rank #1 (Strong Buy).
Note that stocks with a Zacks Rank #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Alibaba Group’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident in looking for an earnings beat.
What is Driving the Better-than-Expected Earnings?
The Chinese e-Commerce company, which operates as a platform for third-party sellers, neither sells goods directly to merchants nor holds inventory. Alibaba Group’s strong market position in China, uninterrupted growth in mobile business, unfazed improvement in commerce retail business and improving gross merchandise value should boost fiscal second-quarter earnings.
Additionally, Alibaba is witnessing increasing monetization rates. The company, which focuses not only on foreign brands but also on other high-profile merchants on its platforms, is building up its online marketing inventory on both mobile and PC. As a result of a higher monetization rate, its profits, too, are going up.
Some of the current buoyancy surrounding the shares of Alibaba is due to the Chinese e-Commerce goliath’s dominance in the mobile search market and matching product development efforts.
ALIBABA GROUP Price and EPS Surprise
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