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

Zacks Equity Research

In the latest trading session, Baidu Inc. (BIDU) closed at $126.93, marking a +0.51% move from the previous day. This move lagged the S&P 500's daily gain of 1.01%. Meanwhile, the Dow gained 0.66%, and the Nasdaq, a tech-heavy index, added 1.43%.

Prior to today's trading, shares of the web search company had lost 0.01% over the past month. This has lagged the Computer and Technology sector's gain of 2.89% and the S&P 500's gain of 0.19% in that time.

BIDU will be looking to display strength as it nears its next earnings release, which is expected to be February 6, 2020. The company is expected to report EPS of $1.82, down 5.21% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $3.90 billion, down 1.27% from the year-ago period.

It is also important to note the recent changes to analyst estimates for BIDU. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.08% lower. BIDU currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, BIDU is holding a Forward P/E ratio of 14.96. This represents a discount compared to its industry's average Forward P/E of 26.75.

Investors should also note that BIDU has a PEG ratio of 2.06 right now. 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. The Internet - Services was holding an average PEG ratio of 2.1 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 171, putting it in the bottom 33% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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