Why Baidu (BIDU) Stock Is Higher Friday

NEW YORK (TheStreet) -- Shares of Baidu Inc. (BIDU) are higher 2.14% to 163.16 on Friday after the Chinese language search engine released its first quarter 2014 results.

The company noted a 7.4% increase of $381.8 million in operating profit, compared to $355.9 million reported during the same quarter in 2013.

Net income rose 24.1% to $407.8 million, versus the $328.9 million Baidu earned during the first quarter of 2013.

Total revenue for the first quarter 2014 was $1.528 billion, a 59.1% increase from the 961.0 million earned during the same period in 2013.

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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 some important positives, 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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BIDU's very impressive revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues leaped by 55.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 $4.96 versus $4.78 in the prior year. This year, the market expects an improvement in earnings ($31.76 versus $4.96).
  • Despite currently having a low debt-to-equity ratio of 0.46, 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 3.78 is very high and demonstrates very strong liquidity.
  • 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 74.13% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • The gross profit margin for BAIDU INC is rather high; currently it is at 66.01%. 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 29.36% compares favorably to the industry average.
  • You can view the full analysis from the report here: BIDU Ratings Report

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