NEW YORK (TheStreet) -- Shares of Baidu (BIDU) - Get Report fell 2.99% to $222.11 in afternoon trading Wednesday ahead of the company's scheduled third-quarter earnings report after the market close. Here's what analysts are expecting from the Chinese web services giant.
The consensus estimate calls for Baidu to report earnings of $9.83 a share on revenue of $13.55 billion. In the third quarter last year, Baidu posted earnings of $8.63 a share, which came up short of the consensus estimate of $8.70 a share. Revenue totaled $8.89 billion, which beat analysts' estimate of $8.85 billion.
In the second quarter of 2014, Baidu reported earnings of $10.09 a share, which trounced the consensus estimate of $8.21 a share. Revenue totaled $11.99 billion, which was just shy of analysts' expectations of $12.02 billion.
Separately, 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 a few notable strengths, 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 solid stock price performance. 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 analysis by TheStreet Ratings Team goes as follows:
- BIDU's very impressive revenue growth exceeded the industry average of 28.5%. Since the same quarter one year prior, revenues leaped by 55.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- BAIDU INC has improved earnings per share by 31.4% in the most recent quarter compared to the same quarter a year ago. 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 $4.96 versus $4.78 in the prior year. This year, the market expects an improvement in earnings ($36.40 versus $4.96).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 31.7% when compared to the same quarter one year prior, rising from $434.72 million to $572.56 million.
- Despite currently having a low debt-to-equity ratio of 0.55, 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 3.77 is very high and demonstrates very strong liquidity.
- Powered by its strong earnings growth of 31.45% and other important driving factors, this stock has surged by 39.95% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: BIDU Ratings Report