U.S. markets open in 2 hours 9 minutes
  • S&P Futures

    4,075.75
    -6.00 (-0.15%)
     
  • Dow Futures

    34,376.00
    -53.00 (-0.15%)
     
  • Nasdaq Futures

    12,033.25
    -29.50 (-0.24%)
     
  • Russell 2000 Futures

    1,881.00
    -2.70 (-0.14%)
     
  • Crude Oil

    81.82
    +0.60 (+0.74%)
     
  • Gold

    1,811.50
    -3.70 (-0.20%)
     
  • Silver

    22.85
    +0.01 (+0.06%)
     
  • EUR/USD

    1.0532
    +0.0003 (+0.03%)
     
  • 10-Yr Bond

    3.5290
    0.0000 (0.00%)
     
  • Vix

    20.31
    -0.27 (-1.31%)
     
  • GBP/USD

    1.2273
    +0.0017 (+0.14%)
     
  • USD/JPY

    134.0620
    -1.2440 (-0.92%)
     
  • BTC-USD

    17,029.58
    -101.97 (-0.60%)
     
  • CMC Crypto 200

    404.35
    -1.80 (-0.44%)
     
  • FTSE 100

    7,539.50
    -18.99 (-0.25%)
     
  • Nikkei 225

    27,777.90
    -448.18 (-1.59%)
     

Baidu Q2 Preview: Can the Earnings Streak Continue?

The Zacks Computer and Technology Sector has been hit hard in 2022, down nearly 25% and vastly underperforming the S&P 500. Over the last month, however, the sector has tacked on a solid 4%, undoubtedly a positive.

A widely-recognized stock in the sector, Baidu BIDU, is on deck to unveil Q2 earnings on Tuesday, August 30th, before market open.

Baidu offers a Chinese language search platform with a network of third-party websites and software applications. Further, the company offers Japanese search services, including web search, image search, video search, and blog search capabilities.

The company carries a Zacks Rank #3 (Hold) with an overall VGM Score of a B. How does everything stack up heading into the print? Let’s take a closer look.

Share Performance & Valuation

As illustrated in the chart below, Baidu shares have been very volatile year-to-date, with price bouncing back and forth. Still, shares are up 1.2% overall, indicating that buyers have defended the stock.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Over the last three months, Baidu shares have continued their trajectory, increasing more than 10% in value and easily outperforming the S&P 500.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, the company’s 26.8X forward earnings multiple is pricey, representing a 13% premium relative to its Zacks Computer and Technology Sector. Still, the value is well below its five-year median of 29.8X.

Baidu carries a Style Score of a B for Value.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been bullish for the quarter to be reported over the last 60 days, with two positive estimate revisions hitting the tape. The Zacks Consensus EPS Estimate of $1.63 reflects a 32% drop-off in quarterly earnings Y/Y.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company’s top-line is also undergoing some turbulence – Baidu is forecasted to have generated $4.4 billion in revenue in Q2, reflecting a 9% decrease from year-ago quarterly sales of $4.9 billion.

Quarterly Performance & Market Reactions

Baidu has been on a blazing-hot earnings streak, exceeding the Zacks Consensus EPS Estimate in 12 consecutive quarters. Just in its latest print, the company penciled in a massive 132% bottom-line beat.

Top-line results have been just as remarkable – BIDU has chained together ten consecutive revenue beats. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In addition, the market has reacted well in response to the company’s releases as of late, with shares moving upwards following back-to-back prints, both by at least 5.3%.

Putting Everything Together

Baidu shares have posted market-beating returns YTD and over the last three months but have had significant price swings.

Shares trade at steep valuation multiples but are well below their five-year median.

Analysts have been bullish for the quarter to be reported, and estimates reflect a declining top and bottom-line.

Furthermore, the company has consistently exceeded quarterly estimates, and the market has had favorable reactions following the prints over its last two.

Heading into the release, Baidu BIDU carries a Zacks Rank #3 (Hold) with an overall VGM Score of a B.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Baidu, Inc. (BIDU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research