| Stock (Symbol) | Stock Price | |
Baidu.com (BIDU) |
$200 |
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| Data is as of | Expected to Report | Sector |
May 29, 2015 |
Jul 22 – Jul 27 |
Technology |
| Sharek’s Take | ||
 Baidu had sales growth of 34% last qtr but profits fell 6% as the company increased R&D spending by 79%. I figured last qtr that 2015 would be a year of transition — and so far and it is. The stock was $204 last qtr and is $200 now. Profit growth doesn’t look good again until Q4 — but that estimate just fell from 41% growth to 31%. It could fall more. Meanwhile the added R&D is keeping the company on top in China with a 60% share of search ads, but mobile ads aren’t as lucerative as desktop ads, and now account for 50% of sales. BIDU is within 4% of my 2015 Fair Value of $209. But 2016’s Fair Value is $281 and that gives the stock 40% upside potential over the next 18 months. That is unless managment doesn’t bloat expenses again. |
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| One-Year Chart | ||
 Chart doesn’t look too healthy, but I don’t thinks the stock’s gonna fall too much lower. I feel BIDU is worth 30x earnings and the P/E is 29 now. Qtrly profit growth is going through a rough patch, but the Est LTG of 27% is very good. |
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| Earnings Table | ||
 Last qtr’s sales growth was 34%, way down from 59% growth a year ago. Profits fell 6%.BIDU beat the street by 3 cents but this estimate was slashed 40 cents a qtr earlier. Annual Profit Estimates continue to fall, just not as much as last qtr. Maybe profit growth returns in the 4th qtr, but I don’t know. It may be a year from now until we see progress. |
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| Fair Value | ||
 BIDU has gone through periods of higher R&D spending, and also periods of no stock growth. I originally bought the stock at $9 in 2006. Now I think we should just wait. |
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| Ten-Year Chart | ||
 It’s hard to believe this stock still isn’t ten years old. It’s been a great investment. Profits up from 3 cents to almost $7. And I think it is still a good stock that could compound 25% to 30% a year. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
15 of 23 |
Baidu is spending to grow and unfortunately is not getting as much bang for its buck as it used to. I feel 2015 is a year of transition and the stock will resume its uptrend in 2016. |
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Aggressive Growth Portfolio
N/A |
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