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Baidu (BIDU) Highlighted As Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Baidu ( BIDU) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Baidu as such a stock due to the following factors:

  • BIDU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $632.8 million.
  • BIDU has traded 3.2 million shares today.
  • BIDU is down 3% today.
  • BIDU was up 7.9% yesterday.

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More details on BIDU:

Baidu, Inc. provides Chinese language Internet search services. It also offers a Chinese language search platform for businesses to reach their customers. BIDU has a PE ratio of 28.3. Currently there are 8 analysts that rate Baidu a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Baidu has been 4.1 million shares per day over the past 30 days. Baidu has a market cap of $52.5 billion and is part of the technology sector and internet industry. Shares are up 49.7% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Baidu as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 43.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, BIDU's share price has jumped by 41.64%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BIDU should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • BAIDU INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BAIDU INC increased its bottom line by earning $4.78 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($4.94 versus $4.78).
  • The gross profit margin for BAIDU INC is rather high; currently it is at 69.84%. Regardless of BIDU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BIDU's net profit margin of 34.96% significantly outperformed against the industry.
  • Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.99 is very high and demonstrates very strong liquidity.

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