Stock (Symbol) |
Baidu.com (BIDU) |
Stock Price |
$179 |
Sector |
| Technology |
Data is as of |
| June 13, 2017 |
Expected to Report |
| Jul 26 |
Company Description |
 Baidu, Inc. (Baidu) is a Chinese-language Internet search provider (ISP). 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. 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 (BIDU) profit growth is bouncing back, but investors remember what the company — and the stock — did during the past three years. Baidu, China’s largest search engine went up more than ten-fold a ten-year period from 2006 to 2016. I owned the stock in my Growth Portfolio, I first bought at $9 in May 2006 and sold at $19 in March 2009. Then I ten got back on at $43 in October 2009 and sold in August 2015 at $158. The reason I sold was profit growth was slowing, and I didn’t like the spending spree to diversify away from its core search business. Outside investments management has made include a Brookstone type retail store that sells things like a wireless fishfinder, and autonomous cars. Profits peaked in 2014 and profits fell in 2015 and 2106. This year (2017) profits are set to rebound yet still not hit record highs. The stock meanwhile has been stuck in a base — yet has been trying to break out. Profit growth went from negative to positive last qtr, but there were still things not-to-like in the report, specifically:
BIDU was a great stock for a decade, yet lost its way. I feel money managers like myself aren’t forgetting the past few years. Thus, even though profits are expected to climb 50% on average the next 4 qtrs, we are leery of the stock. There are new leaders in the Chinese Internet game, and there are broken leaders. Until BIDU can successfully break out to new highs on strong volume (it’s failed numerous times this past year) investors aren’t going to respect it. The P/E is 31, which is reasonable for an Internet stock. Thus, BIDU has room to run if it were to break out, but in the meantime it’s stuck in this base going back-and-forth. BIDU is on my radar, but for now my focus is on other Inernet stocks. |
One Year Chart |
 Revenue fell 7% last qtr. Man, that’s bad. These other CHinese companies are eating Baidu’s lunch. Yes profits rose 23% but that was due to a bad qtr a year-ago. BIDU beat the street by 11 cents, but this estimate was slashed by 49 cents 3 qtrs earlier. One good thing is Annual Profit Estimates rose this qtr. 2017’s from $5.50 to $5.73 (note this was $6.22 a few qtrs earlier). Last qtr the Estimated Long-Term Growth Rate was -12% and now its up to 22%. Qtrly profits are expected to climb 51%, 38%, 77% and 35% the next 4 qtrs. Lots of positive developments here, but us institutional investors don’t forget. |
Fair Value |
 BIDU has good upside here. My 2018 Fair Value is $275 which is around 50% higher than the current price. So if this stock can hop on the bandwagon it could really make a move higher. |
Bottom Line |
 Baidu has gone from leader to laggard and now with profit growth rebounding it could be a future leader. This ten-year chart shows a great looking triangular pattern that could lead to a nice move higher — if it were to breakout. But in the meantime BIDU hasn’t broken out. I feel if things were truly getting better this stock would be higher. So I’m keeping BIDU on my radar, with the intent of buying if the stock breaks out on high volume. The company is set to report profits July 23rd, and that’s a day to watch as strong results could turn the stock from being a laggard to a leader once again. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
