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
) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) 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 $688.1 million.
- BIDU has traded 3.7 million shares today.
- BIDU is trading at 1.90 times the normal volume for the stock at this time of day.
- BIDU crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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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 5.5. Currently there are 10 analysts that rate Baidu a buy, no analysts rate it a sell, and 3 rate it a hold.
The average volume for Baidu has been 4.3 million shares per day over the past 30 days. Baidu has a market cap of $54.6 billion and is part of the technology sector and internet industry. Shares are down 14.5% year-to-date as of the close of trading on Wednesday.
rates Baidu as a
. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 44.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 82.90% over the past year, a rise that has exceeded that of the S&P 500 Index. 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's earnings per share improvement from the most recent quarter was slightly positive. 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 $4.78 versus $3.02 in the prior year. This year, the market expects an improvement in earnings ($32.04 versus $4.78).
- The gross profit margin for BAIDU INC is rather high; currently it is at 69.53%. 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 34.28% significantly outperformed against the industry.
- Despite currently having a low debt-to-equity ratio of 0.51, 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 5.37 is very high and demonstrates very strong liquidity.
- You can view the full Baidu Ratings Report.