Baidu Inc. (BIDU) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
Franklin Resources (BEN) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Baidu Inc. (BIDU) closed at $170.15 in the latest trading session, marking a -0.34% move from the prior day. This change lagged the S&P 500's 0.29% loss on the day. At the same time, the Dow lost 0.55%, and the tech-heavy Nasdaq gained 0.07%.

Coming into today, shares of the web search company had lost 1% in the past month. In that same time, the Computer and Technology sector gained 4.76%, while the S&P 500 gained 2.14%.

BIDU will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.79, down 69.62% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.62 billion, up 8.73% from the year-ago period.

BIDU's full-year Zacks Consensus Estimates are calling for earnings of $8.88 per share and revenue of $17.65 billion. These results would represent year-over-year changes of -7.88% and +15.15%, respectively.

Any recent changes to analyst estimates for BIDU should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 9.58% lower. BIDU is holding a Zacks Rank of #5 (Strong Sell) right now.

In terms of valuation, BIDU is currently trading at a Forward P/E ratio of 19.23. This represents a discount compared to its industry's average Forward P/E of 25.37.

Meanwhile, BIDU's PEG ratio is currently 1.39. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. BIDU's industry had an average PEG ratio of 2.81 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 166, which puts it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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