Baidu Blows Them Away Again

There was little doubt that Baidu (Nasdaq: BIDU  ) would come through with another blowout quarter last night.

The signs were there for those paying attention.

  • Baidu had beaten Wall Street's profit targets in each of the seven previous quarters.
  • Traffic trackers in China continue to give Baidu growing gobs of market share since Google's (Nasdaq: GOOG  ) symbolic retreat last year.
  • Smaller rival's (Nasdaq: SOHU  ) Sogou posted an 183% surge in paid search revenue during the same quarter, revealing during its call earlier this week that Sogou commands only 4% of China's search market and a mere 1.6% of the search market's revenue.

So how good was Baidu's first quarter? China's leading search engine clocked in with revenue of $372 million, 88% ahead of where it was a year earlier. Net income soared 123% to $163.5 million -- or $0.47 a share. Analysts were banking on a profit of $0.45 a share on $367.4 million in revenue.

Many of the hottest companies to go public in recent months are Chinese dot-com plays: video-sharing site (Nasdaq: YOKU  ) , Web-based retailer Dangdang (Nasdaq: DANG  ) , and cyberspace security specialist Qihoo 360 (Nasdaq: QIHU  ) . Social networking site Renren is going public.

Buzz over Baidu and SINA's (Nasdaq: SINA  ) microblogging phenom, Weibo, have helped grease the pipeline of Chinese IPOs with a dot-com bent. It's unlikely that any of these new offerings would've been possible if Baidu, an undisputed bellwether, wasn't a scorcher.

It's going to get even better. Baidu's guidance calls for $493.3 million to $503.9 million in revenue for the current quarter. The pros were perched at $485.2 million.  

Valuations aren't for the squeamish. Baidu closed yesterday at 59 times this year's projected profitability and 40 times next year's target. Analyst estimates will inch higher -- and multiples lower -- but Baidu isn't going to woo too many value investors.

It doesn't need to. The stock's been an 18-bagger since I recommended it to Motley Fool Rule Breakers subscribers five years ago, and it seemed expensive to many at that time, too. As rich as Baidu's multiples may seem, it's growing its bottom line even faster.

Thanks for the blowout, Baidu, even if it didn't come as much of a surprise.

Is it finally time to sell Baidu or is there more market thumping to come? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value pick. Baidu, Google, and are Motley Fool Rule Breakers recommendations. SINA is a Motley Fool Stock Advisor choice. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz has only been to China once, but he relishes admiring its dot-com revolution from afar. He does not own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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.

  • Report this Comment On April 29, 2011, at 5:02 AM, MrChina wrote:

    BIDU is a definite buy in a market that sees 1mn+ new internet users weekly and is still in very very early stages of growth. Lots more room to run for this Chinese juggernaut and along for the ride...

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: 1484079, ~/Articles/ArticleHandler.aspx, 10/21/2016 4:16:16 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 Moments ago Sponsored by:
DOW 18,146.12 -16.23 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

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

10/21/2016 4:00 PM
BIDU $176.76 Up +1.59 +0.91%
Baidu CAPS Rating: *****
GOOGL $823.73 Up +2.10 +0.26%
Alphabet (A shares… CAPS Rating: *****
SINA $76.29 Down -0.51 -0.66%
Sina CAPS Rating: ***
SOHU $42.51 Up +0.60 +1.43% CAPS Rating: ***