After Baidu's Recent Beating, Is the Stock a Buy?

Now that the stock's come down a bit on some short-term concerns about Baidu  (NASDAQ: BIDU  ) and the economy in China as a whole, is the stock a buy today? Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu (aka the "Chinese Google (NASDAQ: GOOGL  ) ").

Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.

Brendan Byrnes: Hey, folks, I'm Brendan Byrnes and I'm joined today by our tech and telecom analyst for, Andrew Tonner.

Andrew, let's take a look at Baidu, the dominant Chinese search engine. Recently beat up after earnings, that multiple is steadily coming down. Is this a buying opportunity?

Andrew Tonner: It absolutely is. You look at this company and if you turn off the stock market, turn off the noise of having to hang a price on these shares -- you look just at the numbers -- you would be absolutely thrilled to see a company putting up the kind of growth that they are.

The company still, in its most recent quarter, grew revenue at 42%. They gave guidance that missed Wall Street's median expectation by $6 million, but never mind the fact that that's actually 41% growth. Still, again, for the upcoming quarter.

It's a high-margin business that has a dominant franchise in a growing space, that's trading for a very cheap multiple. If you had to make a checklist for all the things you'd look for in a great play right now, Baidu has them all.

The model we've seen is so successful, basically porting the Google search engine model over into China, but like Google in mobile as well, Baidu is being very proactive.

Keep in mind that, although Android is the dominant operating system in China on mobile, that it's Baidu's search engine that actually powers 80% of Android searches in China. They're also the default search engine now for Chinese iPhones as well.

They're very proactive in the mobile front as well. They dominate their core business of desktop search, and, really, the story here as well is as online advertising spend in China increases, Baidu is going to be the huge beneficiary. They have around 600,000 and potentially 50 million small and medium-sized businesses advertising with them now. As that number increases, it'll be a huge windfall for Baidu.

I like what the company's doing. I think they're probably one of the best plays in terms of a value for growth type company in tech right now. I love them at this price, absolutely.

Brendan: Yeah, I absolutely agree. A lot of room to run, and at this multiple I think you take advantage of a buying opportunity here, short-sightedness by Wall Street.

Thank you, Andrew. Fool on!

Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2264515, ~/Articles/ArticleHandler.aspx, 9/25/2016 8:33:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
BIDU $191.72 Down -3.73 -1.91%
Baidu CAPS Rating: *****
GOOGL $814.96 Down -0.99 -0.12%
Alphabet (A shares… CAPS Rating: *****