Will Alibaba Group (BABA) Beat Earnings Estimates In Q2?

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, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.13%. This is a meaningful indicator of a likely positive earnings surprise. Please check our 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.

Other Stocks to Consider

Alibaba Group is not the only firm looking up this earnings season. We also see likely earnings beats coming from these companies:

Ashford Hospitality Prime, Inc. (NYSE:AHP) is slated to report third-quarter earnings results on Nov 2. The company has an Earnings ESP of +9.76% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Glaukos Corporation (NYSE:GKOS) with an Earnings ESP of +200.0% and a Zacks Rank #1. The company is slated to report third-quarter earnings results on Nov 10.

Avon Products Inc. (NYSE:AVP) with an Earnings ESP of +33.33% and a Zacks Rank #1. The company is slated to report third-quarter earnings results on Nov 3.

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