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Baidu Inc. (BIDU) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3-min read

Baidu Inc. (BIDU) closed at $142.38 in the latest trading session, marking a +0.92% move from the prior day. The stock lagged the S&P 500's daily gain of 2.76%. At the same time, the Dow added 2.43%, and the tech-heavy Nasdaq gained 0.13%.

Coming into today, shares of the web search company had gained 0.89% in the past month. In that same time, the Computer and Technology sector lost 15.41%, while the S&P 500 gained 4.44%.

Baidu Inc. will be looking to display strength as it nears its next earnings release. On that day, Baidu Inc. is projected to report earnings of $1.42 per share, which would represent a year-over-year decline of 40.59%. Meanwhile, our latest consensus estimate is calling for revenue of $4.11 billion, down 15.43% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.30 per share and revenue of $19.67 billion, which would represent changes of -1.19% and +1.93%, respectively, from the prior year.

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Investors might also notice recent changes to analyst estimates for Baidu Inc.These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Baidu Inc. is currently a Zacks Rank #1 (Strong Buy).

Investors should also note Baidu Inc.'s current valuation metrics, including its Forward P/E ratio of 17. For comparison, its industry has an average Forward P/E of 19.94, which means Baidu Inc. is trading at a discount to the group.

It is also worth noting that BIDU currently has a PEG ratio of 0.81. 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 1.52 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 133, putting it in the bottom 48% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

To follow BIDU in the coming trading sessions, be sure to utilize Zacks.com.


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