There will be plenty of stateside earnings reports to sift through this week, but don't forget to turn your attention to China tomorrow night.
After growing its bottom line by 88% on an 83% uptick in revenue during last year's final quarter, China's leading search engine is still a sprinter. Analysts are targeting Baidu's earnings to soar 79% in tomorrow's quarterly report, propelled by an 82% surge on the top line.
There's obviously more to Baidu than just a blur of speed, so let's go over three things that will make Tuesday night's report interesting.
1. Baidu rarely comes up short
The only thing more aggressive than Wall Street projections is Baidu's actual performance. The fast-growing search provider has only missed analyst profit targets just once since going public at a split-adjusted $2.70 seven summers ago.
More to the point, Baidu has landed ahead of the prognosticators for 11 consecutive quarters.
Source: Thomson Reuters.
The last two periods have been close, and concerns about China's slowing economic growth can't be dismissed. However, when the trend shows a company consistently besting out analysts the smart money has to be on another beat.
2. There's still plenty of room for growth
Baidu was commanding roughly two-thirds of the country's searches when Google
It's easy to get nervous. There isn't a lot of market share left for Baidu to gobble up. Thankfully the pie itself is growing. Baidu closed out 2011 with 311,000 active online marketing customers, a mere 13% increase over the past year. That is not a bad thing, since it also means that the average advertiser is spending a lot more to drum up leads through Baidu.
As China's youth embraces both cyberspace and discretionary income, advertisers will continue to make sure that they spend plenty through Baidu to make sure that they reach them.
3. Organic growth can be expanded with the right acquisitions
Baidu closed out the year with more than $2.2 billion at a time when it's getting hard for Chinese Internet companies to go public on stateside exchanges. Jaded investors have been burned by seemingly prolific IPOs that have gone nowhere.
Industry consolidation kicked off last month when video-streaming leader Youku
Whether Baidu wants to use its growing billfold either to buy fallen public companies or fast-growing private companies that find the climate for an IPO unkind, the company may have some thoughts as to what it plans to do with its cash-rich balance sheet.
Baidu's stock defied the rough time that most Chinese Internet companies had last year, rising 21% in 2011. The stock is actually trading 24% higher so far in 2012. Beating the market is easy when you have a habit of impressing Wall Street every three months. Baidu's next quarterly moment to shine comes tomorrow night.
Bullish on Baidu
A bullish call on Baidu has served me well on Motley Fool CAPS over the years. True to the CAPScall initiative, I'm not going to give up on it now. Baidu has soared 1,638% since I recommended it to Rule Breakers newsletter subscribers six years ago, but now it's time to discover the next rule-breaking multibagger. It's a free report. Want it? Get it.
Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of Google, Sohu.com, and Baidu. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.