Baidu logged a 3.55% change Friday and is now trading at a price of $156.27 per share.
Baidu shares moved 5.98% over the last 52 weeks, with a high of $160.88 and a low of $73.58. During this time, the stock outperformed the S&P 500 index by 19.19%. As of January 2022, the company's 50-day average price is $142.0. Baidu, Inc. provides Internet search services primarily in China. The large-cap Technology company is based in Beijing, China. Baidu has not offered any dividends in the last year.
The Company Has a Steady Stream of Positive Cash Flows:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $107,413 | $107,074 | $124,493 | $123,675 |
| Revenue Growth | n/a | -0.32% | 16.27% | -0.66% |
| Gross Margins | 41.49% | 48.49% | 48.34% | 48.3% |
| Gross Margins Growth | n/a | 16.87% | -0.31% | -0.08% |
| Operating Margins | 5.87% | 13.39% | 8.45% | 12.87% |
| Operating Margins Growth | n/a | 128.11% | -36.89% | 52.31% |
| Net Margins | 1.92% | 20.99% | 8.21% | 6.11% |
| Net Margins Growth | n/a | 993.23% | -60.89% | -25.58% |
| Earnings Per Share | $5.9 | $64.98 | $29.07 | $21.53 |
| EPS Growth | n/a | 1001.36% | -55.26% | -25.94% |
| Diluted Shares (MM) | 349 | 346 | 352 | 351 |
| Free Cash Flow (MM) | $9,337 | $18,869 | $8,882 | $26,170 |
| FCF Growth | n/a | 102.09% | -52.93% | 194.64% |
| Capital Expenditures (MM) | $19,121 | $5,331 | $11,240 | $0 |
| Net Debt / EBITDA | 1.22 | 0.8 | 1.25 | 2.56 |
Baidu Is Fairly Priced at Current Levels:
Compared to the Technology sector's average of 27.16, Baidu has a trailing twelve month P/E ratio of 51.07 and, according to its EPS guidance of 11.35, an expected P/E ratio of 13.77. Baidu's PEG ratio is 0.33 based on its 156.2% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Baidu's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 3.91, which suggests that the company's shares are actually overvalued.
However, Baidu is likely undervalued in terms of its equity because its P/B ratio is 1.323 compared to its sector average of 6.23. The company's shares are currently trading -79.39% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the formula:
√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 39.98 * 639.29) = $758.34
Despite Baidu's elevated earnings multiple, the company's impressive cash flow trend, decent P/B ratio, and reasonable leverage demonstrate the company may be fairly valued.
Baidu Is the Subject of Mixed Market Indicators:
37 analysts are following Baidu and have set target prices ranging from $101.74 to $235.72 per share. On average, they have given the company a rating of buy. At the current price of $156.27, BIDU is trading -12.87% away from its average analyst target price of $179.36 per share, implying an analyst consensus of some upside potential for the stock.
