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Can Solid Product Portfolio Aid Baidu's (BIDU) Q3 Earnings?

Zacks Equity Research

Baidu, Inc. BIDU is scheduled to report third-quarter 2019 results on Oct 29. In the last reported quarter, it delivered a positive earnings surprise of 56.38%.

Notably, the stock outperformed the Zacks Consensus Estimate in three of the last four quarters, with the average positive surprise being 19.44%.

Performance in the Last Reported Quarter

Baidu reported second-quarter 2019 non-GAAP earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate of 94 cents.

Revenues of RMB26.3 billion ($3.84 billion) were up 9% sequentially and 1% year over year. Also, total revenues marginally surpassed the Zacks Consensus Estimate of $3.77 billion.

Baidu, Inc. Price and EPS Surprise


Baidu, Inc. Price and EPS Surprise

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

Estimates for Q3

Baidu expects total revenues in the range of RMB26.9 billion (or $3.84 billion) to RMB28.5 billion (or $4.07 billion), indicating a year-over-year increase of (5)-1%. The Zacks Consensus Estimate for revenues is pegged at $4.12 billion. 

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

Expanding Product Portfolio - Key Catalyst

Baidu’s continuous efforts to strengthen its 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.This trend is likely to have continued in the third quarter.

The company is leaving no stone unturned to bolster presence in the autonomous driving space. In the third quarter, Baidu announced new product launches and solutions in a bid to expand footprint in this space.

Hence, we believe that its strong focus on product innovation and expansion is likely to positively reflect on the upcoming results.


The company has been making heavy investments in a bid to continuously diversify business from mobile internet into smart home, cloud and autonomous driving markets. These mounting investment costs might have resulted in an increase in operating expenses. Also, higher expenses are expected to get reflected in its bottom-line number.

Increasing competition from players like Google, Alibaba and WeChat is likely to have hurt the to-be-reported quarter’s earnings. Further, slowing economy and macroeconomic headwinds in China are anticipated to have been risks.

Earnings Whispers

Our proven model does not conclusively 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.But that is not the case here.

Earnings ESP: The company has an Earnings ESP of -22.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Baiduhas a Zacks Rank #4.

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.

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Advanced Micro Devices, Inc. AMD has an Earnings ESP of +6.54% and a Zacks Rank of #2.

Spotify Technology SA SPOT has an Earnings ESP of +26.98% and a Zacks Rank #3.

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Baidu, Inc. (BIDU) : Free Stock Analysis Report
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