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Baidu Inc ADR BIDU

Morningstar Rating
$110.58 −2.01 (1.79%)
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Company Report

Baidu Earnings: Weakness in Advertising Offset by Continued Double-Digit Growth in Cloud Business

We keep our fair value estimate for Baidu at USD 174, or HKD 171 per share after it posted first-quarter revenue of CNY 31.1 billion that was in line with our estimate. Core Baidu advertising revenue increased only 3% year on year, underscoring continued weakness in China’s macroeconomy. Advertising headwinds were offset by 12% year-on-year growth for the cloud artificial intelligence business, which should remain a bright spot for Baidu as revenue should continue to rise in the midteens year on year next quarter. Baidu remains highly confident that its generative AI model will be a long-term earnings driver, as it is seeing demand from the application side. Clients are now diversified beyond the industrial and infrastructure sectors, and there is greater demand from domestic internet platforms throughout various industries. Baidu said generative AI revenue was about CNY 1 billion this quarter, of which, CNY 322 million came from AI cloud.

Price vs Fair Value

BIDU is trading at a 468% premium.
Price
$110.58
Fair Value
$727.00
Uncertainty
High
1-Star Price
$123.30
5-Star Price
$366.60
Economic Moat
Wlpz
Capital Allocation
Tnjsgll

Bulls Say, Bears Say

Bulls

Baidu is strengthening its mobile ecosystem with search, livestreaming, and mini programs, helping to create a closed-loop experience for users to acquire information and make transaction.

Bears

Alibaba, Tencent, ByteDance, Kuaishou and other social media platforms are competing in terms of advertising budgets, which will result in slow growth in revenue for Baidu search.

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News

Trading Information

Previous Close Price
$112.59
Day Range
$108.88112.35
52-Week Range
$94.25156.98
Bid/Ask
$110.60 / $111.06
Market Cap
$38.78 Bil
Volume/Avg
6.3 Mil / 3.7 Mil

Key Statistics

Price/Earnings (Normalized)
9.33
Price/Sales
2.02
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.46%

Company Profile

Baidu is the largest internet search engine in China with 84% share of the search engine market in September 2021 per web analytics firm, Statcounter. The firm generated 72% of core revenue from online marketing services from its search engine in 2022. Outside its search engine, Baidu is a technology-driven company and its other major growth initiatives are artificial intelligence cloud, video streaming services, voice recognition technology, and autonomous driving.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Large Core
Total Number of Employees
45,500

Competitors

Valuation

Metric
BIDU
BABA
03690
Price/Earnings (Normalized)
9.339.9930.60
Price/Book Value
1.111.554.66
Price/Sales
2.021.712.57
Price/Cash Flow
7.578.8226.89
Price/Earnings
BIDU
BABA
03690

Financial Strength

Metric
BIDU
BABA
03690
Quick Ratio
2.471.711.57
Current Ratio
2.791.801.82
Interest Coverage
4.8393.0210.27
Quick Ratio
BIDU
BABA
03690

Profitability

Metric
BIDU
BABA
03690
Return on Assets (Normalized)
4.44%8.98%8.68%
Return on Equity (Normalized)
7.55%15.96%16.49%
Return on Invested Capital (Normalized)
3.95%12.33%11.89%
Return on Assets
BIDU
BABA
03690
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