A strong performer from today's morning trading session is Baidu, whose shares rose 1.6% to $84.82 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
an Exceptionally Low P/B Ratio but Trades Above Its Graham Number:
Baidu, Inc. provides online marketing and cloud services through an internet platform in the People's Republic of China. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 30.01 and an average price to book (P/B) ratio of 3.91. In contrast, Baidu has a trailing 12 month P/E ratio of 11.2 and a P/B ratio of 0.12.
Baidu has moved -28.5% over the last year compared to 31.3% for the S&P 500 — a difference of -59.8%. Baidu has a 52 week high of $120.25 and a 52 week low of $78.95.
Exceptional EPS Growth Obtained Primarily Through Share Buybacks:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $14,876 | $15,429 | $16,410 | $19,536 | $17,931 | $18,958 |
| Gross Margins | 49% | 41% | 48% | 48% | 48% | 52% |
| Net Margins | 27% | 2% | 21% | 8% | 6% | 15% |
| Net Income (M) | $4,010 | $296 | $3,444 | $1,605 | $1,096 | $2,861 |
| Net Interest Expense (M) | $274 | $425 | $476 | $537 | $422 | $457 |
| Depreciation & Amort. (M) | $543 | $807 | $885 | $923 | $939 | $1,041 |
| Diluted Shares (M) | 35,171,043 | 34,884,854 | 2,756 | 2,814 | 2,809 | 2,837 |
| Earnings Per Share | $0.0 | $0.0 | $1.25 | $0.57 | $0.39 | $1.01 |
| EPS Growth | n/a | n/a | n/a | -54.4% | -31.58% | 158.97% |
| Free Cash Flow (M) | $3,955 | $3,165 | $2,930 | $1,448 | $2,593 | $3,581 |
| CAPEX (M) | $1,276 | $923 | $779 | $1,710 | $1,201 | $1,576 |
| Total Debt (M) | $7,215 | $6,221 | $7,419 | $8,414 | $6,785 | $5,777 |
| Net Debt / EBITDA | 1.14 | 0.83 | 0.63 | 1.02 | -0.28 | 0.54 |
| Current Ratio | 2.73 | 2.89 | 2.68 | 2.86 | 2.67 | 3.01 |
Baidu has growing revenues and increasing reinvestment in the business and an excellent current ratio of 3.01. Additionally, the company's financial statements display generally positive cash flows and healthy leverage levels. However, the firm suffers from slimmer gross margins than its peers and exceptional EPS growth obtained primarily through share buybacks.
