Publish date:

Baidu Cruises Past Wall Street View

Shares of Baidu gained in extended trading after the Chinese Web search company topped analyst expectations for its third-quarter results.



) --


(BIDU) - Get Baidu, Inc. Sponsored ADR Class A Report

got a lift late Thursday after the Chinese Web search company handily beat Wall Street views for its third-quarter results, and gave a better than expected revenue outlook for the current quarter.

After the closing bell, Baidu reported a profit of $156.4 million, or 45 cents per ADR

American Depositary Receipt, for the three months ended Sept. 30 with revenue soaring more than 76% on a year-over-year basis to $337.2 million. The average estimate of analysts polled by

Thomson Reuters

was for earnings of 41 cents a share in the September period on revenue of $333.3 million.

Traffic acquisition cost, or TAC, is an important metric for Baidu, measuring what the company pays partners to generate search traffic. For the latest quarter, TAC totaled $30.2 million, or 8.9% of total revenue. The ratio relative to total revenue declined on a sequential basis from 9.7% in the second quarter and on a year-over-year basis from 15.9% in the same period a year earlier, a trend the company attributed to "faster organic traffic growth."

The stock was last quoted at $105.16, up 2.6%, according to

, on volume of nearly 2.4 million. Based on a regular session close of $102.48, the shares were already up more than 140% so far in 2010.

TheStreet Recommends

"Strong execution on our initiatives to expand our customer base and enhance customer service drove another quarter of strong results," said Robin Li, the company's chairman and CEO, in a statement. "By focusing on continuously improving our online marketing system and customer engagement while building awareness of search engine marketing, we are successfully enhancing Baidu's position as a key enabler of China's Internet industry."

For the fourth quarter ending in December, Baidu forecast revenue ranging from $354.2 million to $364.7 million, noting the view represents year-over-year growth of at least 88%. Wall Street's current consensus estimate is for revenue of $348 million.

At current levels, Baidu's stock is up more than 250% from a 52-week low of $35.30 set last October, but with these latest earnings more than doubling its performance in the year-ago equivalent quarter, Baidu so far seems to be justifying its 2011 forward price-to-earnings ratio of almost 47X.

For reference,


(GOOG) - Get Alphabet Inc. Class C Report

2011 forward PE ratio is 19.5X, but the company's non-GAAP earnings in the third quarter only rose 30% from year-ago levels, and TAC came in at 26% of quarterly revenue of $7.29 billion.


Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron


>To submit a news tip, send an email to:

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.