| Stock (Symbol) | Stock Price | |
Baidu.com (BIDU) |
$158 |
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| Data is as of | Expected to Report | Sector |
March 23, 2013 |
Apr 22 – April 25 |
Technology |
| Sharek’s Take | ||
 Baidu is investing heavily in mobile technology and online video games, and this is starting to pay off, but is hurting profitability in the short-term. I’ve dealt with this issue with BIDU before. The problem is when these estimates got cut due to infrastructure spending before, BIDU didn’t end up making more money from the increased investments. For example, my BIDU 2013 est peaked at $6.45 in 2012 Q1 and the company ended up making $4.83 even though these investments have been a success. There are big reductions in annual profit estimates — even as revenue estimates increased — and I feel this stock doesn’t have any upside this year as its fairly valued at 30 times earnings. |
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| One-Year Chart | ||
 I was surprised when BIDU went on a run higher even though qtrly profit growth (bottom) was weak. I think the other Chinese Internet stocks’ success helped BIDU. The Est LTG is only 21%, this used to be a 60% grower. Not anymore. Note the P/E is 30 and is in black, not green. |
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| Earnings Table | ||
 BIDU’s sales zoomed ahead 55% last qtr (compared to 42% 2QtrsAgo) which was above views, but profit growth was only 4%.BIDU missed analyst estimates by 10 cents last quarter. Annual Profit Estimates got slashed. Earlier I said BIDU was once supposed to make $6.45 in 2013, now it doesn’t look like the company can even make that in 2014. Profit growth was expected to accelerate in the first quarter of 2014. Now growth is flat. I bet management knew this a long time ago and didn’t tell us. |
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| Fair Value | ||
 This stock used to get a P/E in the 40s and 50s. But since 2012 the median P/E has been in the high 20s. At 30 times earnings, this stock is where it should be. There’s better values in the Chinese internet space. |
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| Ten-Year Chart | ||
 I’m still surprised BIDU has done so well even though profit growth was only 1% last year and is set to be 9% this year. I bet management lowers estimates again — maybe two consecutive years of no-growth is upon us? |
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| Power Ranking | Bottom Line | |
Growth Portfolio
16 of 26 |
Baidu.com is having to spend to grow and might not have profit growth for a 2nd consecutive year. I’m fed up with these lowered estimates, and feel management knew of this earlier and didn’t tell us. Chinese Internet stocks are good, but I like other stocks better. |
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Aggressive Growth Portfolio
N/A |
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