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Baidu (BIDU) to Report Q2 Earnings: What's in the Cards?

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Baidu, Inc. BIDU is slated to report second-quarter 2020 results on Aug 13. In the last reported quarter, it delivered an earnings surprise of 95.3%.

The stock outperformed earnings estimates in each of the trailing four quarters, with the average surprise being 48.8%.

Performance in the Last Reported Quarter

Baidu reported first-quarter 2020 non-GAAP earnings of $1.25 per share, which surpassed the Zacks Consensus Estimate by 61 cents.

Revenues of RMB22.5 billion ($3.18 billion) were down 22% sequentially and 7% year over year.

Baidu, Inc. Price and EPS Surprise

Baidu, Inc. Price and EPS Surprise
Baidu, Inc. Price and EPS Surprise

Baidu, Inc. price-eps-surprise | Baidu, Inc. Quote

Second-Quarter Estimates

Baidu expects total revenues in the range of RMB25 billion (or $3.5 billion) to RMB27.3 billion (or $3.9 billion), down 5% to up 4%. The Zacks Consensus Estimate for revenues is pegged at $3.42 billion. 

The consensus mark for earnings is pegged at $1.39 per share, implying a decrease of 5.4% from the year-ago reported figure.

Let’s see how things have shaped up for this announcement.

The company’s efforts to strengthen the mobile search engine and AI technologies are anticipated to have been key catalysts for top-line growth. Strong focus on leveraging the AI platform has been aiding it to provide an improved user experience.

In addition, the company’s strengthening presence in the autonomous driving space has been acting as a key catalyst. Baidu’s autonomous driving licenses are expected to have aided the performance of the open-source autonomous vehicle technology platform, Apollo, in the to-be-reported quarter.

Further, the strengthening mobile ecosystem is expected to have contributed to growth in average daily active user base of the Baidu App during the second quarter. Additionally, strong iQIYI segment — which offers online entertainment services — is expected to have aided the company’s performance.

However, the COVID-19 pandemic’s impacts and China's slowing economy are expected to have hurt advertising sales in the quarter to be reported.

Further, mounting investment costs and increasing competition from players like Alibaba (BABA) as well as Tencent’s (TCEHY) WeChat are likely to get reflected in second-quarter results.

Earnings Whispers

Our proven model does not predict an earnings beat for Baidu this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

Earnings ESP: The company has an Earnings ESP of -4.81%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Baidu has a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to deliver a positive earnings surprise in the upcoming releases.

Deere & Company DE has an Earnings ESP of +4.64% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies, Inc. A has an Earnings ESP of +5.00% and a Zacks Rank #2.

The Home Depot, Inc. HD has an Earnings ESP of +17.13% and a Zacks Rank #2.

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With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.

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