Baidu, Inc. (BIDU) is expected to clean up in Chinese search with Google’s ongoing problems in the country. Earnings are projected to grow by 96% in 2010.
Baidu provides Internet search to computer users in China.
Zacks Consensus Estimates Climbing into Earnings Announcement
Baidu will be reporting second quarter results after the bell on July 21. It has a history of surprising on the estimate, having done so the last 4 quarters.
Some analysts have been raising estimates for the quarter and the full year in the last 30 days.
1 analyst has bumped up Q2 in the last week with the consensus up a penny to 30 cents in that time.
The company’s fortunes appear to have turned around dramatically in the last 3 months as the full year Zacks Consensus Estimate has risen 26 cents to $1.23 during that period. 3 out of 16 estimates have moved higher in the last month.
Strong earnings growth is expected to continue in 2011. Analysts anticipate earnings growth of 57% in 2011.
Sales Still Robust
Analysts are also looking for the robust revenue growth to continue through 2011. Revenue is expected to jump 57% for the full year in 2010. In 2011, projections call for sales growth of another 52%.
The Chart
Baidu’s stock has defied the Chinese bear market, which has gripped Chinese stocks since last October.
But in the last 2 months, it has started to show some weakness as it has traded in a narrow range.
Investors Paying the Price for All the Growth
Baidu is a classic aggressively growing stock that is anything but cheap. Investors are betting that the growth rate can continue.
The company is trading with a sky-high forward P/E of 61, which easily tops the industry’s average of 21.
It’s price-to-book ratio is also a nose bleed 25 compared to the industry at 2.3.
Baidu is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
