Why Baidu (BIDU) Stock Is Falling Today

NEW YORK (TheStreet) -- Baidu (BIDU) was falling 5.6% to $153.72 Monday following the news that the Chinese government told the company to stop streaming for American TV shows on its iQiYi streaming service.

According to 24/7 Wall Street, China's State Administration of Press, Publication, Radio, Film, and Television ordered Baidu and other streaming services including Youku Tudou (YOKU) and Sohu.com (SOHU) to remove The Big Bang Theory, The Good Wife, NCIS, and The Practice from their services. The government agency told the streaming services to remove all episodes of the shows in question immediately.

The agency also said that all foreign TV shows will now have to gain approval before they can be added to the streaming services. Foreign programs already have to go through similar processes before they can be shown on broadcast TV stations.

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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, solid stock price performance, growth in earnings per share, increase in net income and largely solid financial position with reasonable debt levels by most measures. 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 59.0%. Growth in the company's revenue appears to have helped boost 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 81.33% 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 has improved earnings per share by 22.1% 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 ($31.80 versus $4.96).
  • The net income growth from the same quarter one year ago has exceeded that of the Internet Software & Services industry average, but is less than that of the S&P 500. The net income increased by 24.0% when compared to the same quarter one year prior, going from $328.92 million to $407.82 million.
  • Despite currently having a low debt-to-equity ratio of 0.45, 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 3.56 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: BIDU Ratings Report

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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.

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