Baidu Earnings: An Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction that turns out to be exactly the wrong move.

Let's turn to Baidu (NASDAQ: BIDU  ) . The Chinese search-engine giant has taken the world by storm with its growth, but China's recent economic slowdown has raised questions about how Baidu will keep expanding. Let's take an early look at what's been happening with Baidu over the past quarter and what we're likely to see in its quarterly report next Monday.

Stats on Baidu

Analyst EPS Estimate

$1.29

Change From Year-Ago EPS

40%

Revenue Estimate

$1.00 billion

Change From Year-Ago Revenue

42.7%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Baidu find the profits you're searching for?
Baidu has given investors some nice surprises recently, including substantial beats of $0.13 and $0.09 per share in the past two quarters. Analysts have been pretty comfortable with their initial guesses this time around, dropping EPS estimates by only a single penny in the past three months. But the stock has only moved minimally higher, rising about 2.5% since late October after a drop following its last earnings report.

Baidu has done an excellent job of walling off its dominant position in China. It has successfully fended off Google (NASDAQ: GOOGL  ) , which has become almost a non-player in the Chinese search space and has largely refocused its efforts toward securing its dominant status in the U.S. More recent competition from Qihoo 360 (NYSE: QIHU  ) , which has gone beyond its traditional anti-virus software specialty to build a competing browser and search engine, could prove a bigger threat, but Baidu has fought back with measures to protect its competitive advantage.

But Baidu isn't content to stay within China. Earlier this month, it announced a partnership with France Telecom's (NYSE: ORAN  ) Orange to build a mobile browser to cover the Africa, Middle East, and Asia region. With substantial growth in smartphone use in the AMEA region, Baidu hopes to take advantage of the expanding market while delivering solutions that will help customers reduce data use.

In assessing Baidu's earnings report, investors need to focus on whether and how long Baidu can sustain the huge growth rate that it has put up over the years. With the stock reflecting a cautious outlook, anything that shows the Chinese market bouncing back should be extremely positive for Baidu investors.

Learn more
Beyond this earnings report, Baidu has plenty of long-term potential. Dig into the meat of Baidu's business plan by reading our brand-new premium report on the stock. Inside, you'll get our analyst's views on whether Baidu is a buy even with the competitive pressures it's facing. Don't wait; click here to access it now.

Click here to add Baidu to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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