Chinese e-commerce giant Alibaba Group (BABA – Free Report) reported fourth-quarter fiscal 2018 results before the opening bell yesterday wherein it surpassed both the earnings and revenue expectation and provided an upbeat fiscal revenue guidance.
Earnings of 91 per ADS came in three cents above the Zacks Consensus Estimate. Revenues jumped 61% year over year to $9.87 billion and surpassed the estimate of $9.17 billion. The robust revenue performance was credited to a growing core e-commerce business, booming cloud computing services and strong media and entertainment growth.
Core e-commerce revenues grew 62% year over year, cloud computing revenues soared 103% while digital media and entertainment revenues increased 34%. Mobile monthly active users in its China retail marketplaces increased 37% year over year to 617 million, while annual active buyers totaled 552 million, up 37% year over year.
The Chinese online retail giant has been expanding its presence in core online retail business with investments in supermarkets and stores as well as in new artificial intelligence and cloud computing businesses. Alibaba acquired a 33% stake in Ant Financial, the electronic payment firm Alibaba spun off in 2011. As such, it expects revenues to grow 60% in fiscal 2019, acceleration from 58% year-over-year revenue growth seen in fiscal 2018, or above 50% excluding businesses that are being acquired.
Market Impact
Based on solid earnings results, BABA shares rose 3.5% on the day. The positive momentum is likely to continue given that the stock has a Zacks Rank #3 (Hold) and a Growth Score of B though it belongs to the bottom-ranked Zacks industry (bottom 39%).
Given this, investors may want to bet on Alibaba for higher returns. As a result, we have highlighted six ETFs having the highest allocation to the Chinese e-commerce giant that have upside potential in the coming months.
BLDRS Emerging Markets 50 ADR Index Fund (ADRE – Free Report)
The product offers exposure to the 50 emerging market-based depositary receipts by tracking the BNY Mellon Emerging Markets 50 ADR Index. About 44% of the portfolio is allotted to the Chinese firms with Alibaba occupying the top position at 17.6%. Brazil, Taiwan and South Korea round off the next three spots, in terms of country exposure. From a sector look, information technology accounts for 41.7% share, followed by financials (16.2%), telecom services (10.9%) and energy (9.8%). ADRE has amassed $166.1 million in its asset base while trades in a light volume of about 13,000 shares. It charges 18 bps in fees per year and added 0.8% on the day. ADRE has a Zacks ETF Rank #3 with a Medium risk outlook.
