Baidu, Inc. (BIDU) has been surging for the last month, jumping back to within striking distance of the 52-week high after rebounding from a key trend line. With four consecutive earnings surprise and a bullish growth projection, this Zacks #1 Rank stock has ended your search for momentum.
Company Description
Baidu, Inc. operates an Internet search engine out of Chine. The company was founded in 2000 and has a market cap of $53 billion.
Baidu’s recent upward momentum comes on the heels of the company’s strong Q1 results from late April that came in well ahead of expectations.
First-Quarter Results
Revenue for the period was up 88% from last year to $372 million. Earnings also looked good, coming in at 47 cents, 7% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 9% over the last four quarters.
Online marketing, the company’s largest revenue stream, saw an impressive 88% increase in revenue from last year. Online marketing customers were up 24%, driving a solid 51% increase in online revenue per marketing customer.
Baidu also scored big in managing expenses, where its Traffic Acquisition Cost (TAC) fell to 8.2% of revenue from 13.2% last year.
Financial Profile
Baidu’s incredible earnings growth has enabled it to build a fortress of a balance sheet, with cash and short-term investments of $1.3 billion against a marginal debt load of $41 million.
Estimates
We’ve seen some decent movement in estimates over the last few months, with the current year adding 13 cents to $2.68. The next-year estimate is up 28 cents in the same time to $4.04, a bullish 51% growth projection.
Valuations
Even though the forward P/E looks high, when pricing in growth projections, shares trade with a PEG ratio of 1.07. only slightly higher than the traditional benchmark for value of 1.
12-Month Chart
On the chart, shares are within striking distance of the 52-week high after rebounding from a key trend line in early June. Look for more support from the trend on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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