NEW YORK (TheStreet) -- Baidu (BIDU) - Get Report shares are up 2.44% to $174.05 in early market trading on Thursday after the Chinese Internet search engine announced a $1 billion share buyback program.
The company will repurchase up to $1 billion of its shares over the next 12 months.
The announcement comes in the wake of the release of the company's disappointing second quarter financial results on Tuesday before the market opened.
The company reported adjusted earnings of $1.81 per share on revenue of $2.67 billion.
Analysts' on average were expecting the company to report earnings of $1.87 per share on revenue of $2.67 billion.
While the company reported a 24% year over year increase in mobile search monthly active users, the company's acquisition cost was $340.6 million, or 12.7% of total revenues.
TheStreet Ratings team rates BAIDU INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate BAIDU INC (BIDU) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 38.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- BAIDU INC reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAIDU INC increased its bottom line by earning $6.01 versus $4.96 in the prior year. This year, the market expects an improvement in earnings ($42.46 versus $6.01).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Internet Software & Services industry average. The net income increased by 3.1% when compared to the same quarter one year prior, going from $572.56 million to $590.58 million.
- Despite currently having a low debt-to-equity ratio of 0.60, 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 3.33 is very high and demonstrates very strong liquidity.
- The gross profit margin for BAIDU INC is rather high; currently it is at 64.48%. 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 22.09% compares favorably to the industry average.
- You can view the full analysis from the report here: BIDU Ratings Report