Baidu Inc. (BIDU): Today's Featured Internet Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Baidu ( BIDU) pushed the Internet industry lower today making it today's featured Internet laggard. The industry as a whole closed the day down 1.1%. By the end of trading, Baidu fell $7.11 (-6.3%) to $106.73 on heavy volume. Throughout the day, 10 million shares of Baidu exchanged hands as compared to its average daily volume of 5.2 million shares. The stock ranged in price between $106.29-$110.50 after having opened the day at $106.81 as compared to the previous trading day's close of $113.84. Other companies within the Internet industry that declined today were: Rediff.com India ( REDF), down 39%, Sify Technologies ( SIFY), down 18.1%, Deltathree ( DDDC), down 13%, and QuinStreet ( QNST), down 11.3%.
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Baidu, Inc. provides Internet search services. The company offers a Chinese language search platform on its Website, Baidu.com; and a Japanese language search platform on its Website, Baidu.jp. Baidu has a market cap of $39.78 billion and is part of the technology sector. The company has a P/E ratio of 21.3, below the average internet industry P/E ratio of 38.8 and above the S&P 500 P/E ratio of 17.7. Shares are down 2.3% year to date as of the close of trading on Tuesday. Currently there are 11 analysts that rate Baidu a buy, no analysts rate it a sell, and four rate it a hold.

TheStreet Ratings rates Baidu as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

On the positive front, Keynote Systems ( KEYN), up 9.3%, Crexendo ( EXE), up 8.6%, ClickSoftware Technologies ( CKSW), up 6.5%, and CafePress ( PRSS), up 5%, were all gainers within the internet industry with Qihoo 360 Technology ( QIHU) being today's featured internet industry leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the internet industry could consider First Trust Dow Jones Internet Idx ( FDN) while those bearish on the internet industry could consider ProShares Ultra Short Technology ( REW).

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