It hasn't been a great morning session for Baidu investors, who have watched their shares sink by -1.1% to a price of $88.38. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
an Exceptionally Low P/B Ratio but Priced at a Premium:
Baidu, Inc. provides online marketing and non-marketing value added 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 30.44 and an average price to book (P/B) ratio of 4.19. In contrast, Baidu has a trailing 12 month P/E ratio of 8.7 and a P/B ratio of 0.11.
Baidu has moved 0.7% over the last year compared to 17.5% for the S&P 500 — a difference of -16.8%. Baidu has a 52 week high of $116.25 and a 52 week low of $74.71.
Summary of the Company's Finances:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $15,429 | $16,410 | $19,536 | $17,931 | $18,958 | $18,238 |
| Gross Margins | 41% | 48% | 48% | 48% | 52% | 50% |
| Net Margins | 2% | 21% | 8% | 6% | 15% | 18% |
| Net Income (M) | $296 | $3,444 | $1,605 | $1,096 | $2,861 | $3,255 |
| Net Interest Expense (M) | $425 | $476 | $537 | $422 | $457 | $387 |
| Depreciation & Amort. (M) | $807 | $885 | $923 | $939 | $1,041 | $938 |
| Diluted Shares (M) | 35 | 2,756 | 2,814 | 2,809 | 2,837 | 2,798 |
| Earnings Per Share | $8.49 | $1.25 | $0.57 | $0.39 | $1.01 | $1.16 |
| EPS Growth | n/a | -85.28% | -54.4% | -31.58% | 158.97% | 14.85% |
| Free Cash Flow (M) | $3,165 | $2,930 | $1,448 | $2,593 | $3,581 | $1,795 |
| CAPEX (M) | $923 | $779 | $1,710 | $1,201 | $1,576 | $1,114 |
| Total Debt (M) | $6,221 | $7,419 | $8,414 | $6,785 | $5,777 | $4,935 |
| Net Debt / EBITDA | 0.83 | 0.63 | 1.02 | -0.28 | 0.54 | 0.4 |
| Current Ratio | 2.89 | 2.68 | 2.86 | 2.67 | 3.01 | 2.09 |
Baidu has an excellent current ratio of 2.09, slight revenue growth and increasing reinvestment in the business, and healthy leverage levels. However, Baidu has slimmer gross margins than its peers, declining EPS growth, and positive cash flows.
