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Baidu Inc. (BIDU) Gains But Lags Market: What You Should Know

Zacks Equity Research

Baidu Inc. (BIDU) closed at $123.33 in the latest trading session, marking a +0.2% move from the prior day. The stock lagged the S&P 500's daily gain of 0.43%. Meanwhile, the Dow gained 0.5%, and the Nasdaq, a tech-heavy index, added 0.75%.

Wall Street will be looking for positivity from BIDU as it approaches its next earnings report date. In that report, analysts expect BIDU to post earnings of $1.43 per share. This would mark a year-over-year decline of 2.72%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.69 billion, down 3.76% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.50 per share and revenue of $15.85 billion. These totals would mark changes of -13.1% and +2.2%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for BIDU. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. BIDU currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that BIDU has a Forward P/E ratio of 18.93 right now. Its industry sports an average Forward P/E of 32.92, so we one might conclude that BIDU is trading at a discount comparatively.

We can also see that BIDU currently has a PEG ratio of 2.7. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BIDU's industry had an average PEG ratio of 2.7 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 66, putting it in the top 26% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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