Stock (Symbol) |
Baidu.com (BIDU) |
Stock Price |
$185 |
Sector |
| Technology |
Data is as of |
| May 31, 2016 |
Expected to Report |
| Jul 25 – Jul 29 |
Company Description |
 Baidu, Inc. (Baidu) is a Chinese-language Internet search provider (ISP). Baidu serves three types of online participants, which include users, customers and Baidu Union Members. The Company offers a Chinese-language search platform on its Website, Baidu.com. It provides Chinese-language Internet search services to enable users to find relevant information online, including Web pages, news, images, documents and multimedia files, through links provided on its Websites. It designs and delivers its online marketing services primarily on its Baidu.com Website to its online marketing customers. As of December 31, 2014 the Company had approximately 813,000 active online marketing customers. Its online marketing customers consist of small and medium enterprises (SMEs) throughout China, domestic companies and Chinese divisions or subsidiaries of multinational companies. Source: Thomson Financial |
Sharek’s Take |
 Baidu’s 2016 profit estimates have been on a steep decline the past 7 qtrs, dropping from $11.71 to $5.71 during that time. Baidu is China’s leading search engine, but has had to overspend on R&D the past couple of years to improve its mobile business. That’s OK, but the company also has habit of acquiring other companies and assets that don’t correlate to its search engine model, and this has hampered profits. Last qtr BIDU had profits down 25%, missed analyst estimates, and 2016’s estimates fell 11%. Future estimates also declined. On the bright side the stock is selling for 32x earnings which is reasonable. If the stock does make the $7.91 expected in 2017 and gets a 30 P/E that would equate to a $237 stock and a gain of $28%. But that 2017 estimate just fell from $8.79 to $7.91. With estimates continuing to deteriorate I am going to continue to sit on the sidelines at this time, but I’ll keep BIDU on my radar and look to buy it when estimates start to increase. |
One Year Chart |
 Sales grew 20% last qtr, I’m so surprised the company had -25% profit growth. Ugh. I really like this stock too, it was a big winner of mine for many years. This is odd to see a negative estimated long-term growth rate. Estimates for the next four qtrs are -13%, 29%, 72% and 35%. So things look great later in the year, but these too have been in decline so who knows what the company will actually make. |
Fair Value |
 I owned BIDU from 2006 to 2015 and sold during the Chinese stock market crash in the Summer of 2015. Profit growth was fantastic years ago and now the company is focused on other areas. Right now the stock is selling around its Fair Value. |
Bottom Line |
 Baidu has been a fantastic stock to own during the last decade, but more recently profit growth hasn’t been what it used to be and that’s held back BIDU stock. Still, this is a market leader in a good market (paid search) in a Chinese economy that is still growing its online users. There’s solid potential long-term, but right now I’m on the sidelines as expenses are growing faster than sales. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
