Baidu Inc. (BIDU) Gains as the Market Falls: What You Need to Know

IIn the last trading session, Baidu Inc. (BIDU) closed at $150.97, marking a +1.29% move from the previous day. This change outpaced the S&P 500’s 1.22% loss on the day. Meanwhile, the Dow lost 0.19% and the Nasdaq, a technology-heavy index, lost 0.53%.

At dawn today, shares of the web search firm had gained 3.67% over the past month, outpacing the IT and technology sector’s 11.78% loss and the 6.58% loss of the S&P 500 during this period.

Investors are hoping for strength from Baidu Inc. as it nears its next earnings release. On that day, Baidu Inc. is expected to report earnings of $1.89 per share, which would represent a 38.64% year-over-year decline. Meanwhile, our latest consensus estimate calls for revenue of $5.04 billion, up 8.6% from the prior year quarter.

It is also important to note recent changes to analyst estimates for Baidu Inc. These revisions generally reflect the latest short-term business trends, which may change frequently. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Our research shows that these estimate changes are directly correlated to short-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven track record of outperformance, with #1 stocks returning an average of +25% per year since 1988. In the past 30 days, our consensus EPS projection has remained stagnant. Baidu Inc. currently holds a Zacks rank of #3 (Hold).

Regarding its valuation, Baidu Inc. holds a Forward P/E ratio of 19.11. For comparison, its industry has an average Forward P/E of 23.08, meaning Baidu Inc. is trading at a discount to the group.

Meanwhile, BIDU’s PEG ratio is currently 10.5. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. The Internet – Services sector currently had an average PEG ratio of 2.41 at yesterday’s close.

The Internet – Services industry is part of the IT and technology sector. This industry currently has a Zacks Industry Rank of 186, which places it in the bottom 28% of all 250+ industries.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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