Baidu Reports A Solid Q3 2013

Baidu Q3 2013 earnings

Baidu (NASDAQ: BIDU), the Chinese Internet search giant, came out with its Q3 2013 earnings report after market hours yesterday. As we had reported in our preview yesterday, the critical number to watch out for was the profit margin of the company. Let’s look at the quarterly performance and what do these numbers mean to investors.

Baidu Q3 2013 Performance

Baidu Q3 2013 performance

Actual performance v/s analyst estimates

The company marginally beat analyst expectations. The analyst consensus estimate for earnings, according to streetinsider.com, was adjusted earnings of $1.46 per ADS. The company reported the adjusted per ADS of $1.48, 2 cents above the consensus estimate. On the revenue front the company beat the analyst estimate of 8.8 billion CNY with quarterly revenues of 8.9 billion CNY.

Current Valuation Multiples

The company currently enjoys premium valuation multiple compared to similar companies. The P/E of the company using the Last Twelve Months (LTM) earnings is 32.73, a multiple which is slightly above the industry average of 28.6. However it is important to note that the company has been growing faster than most of its peers and with far higher profitability margins and therefor the higher P/E multiple is justified.

Conclusion

The quarterly performance was marginally ahead of analyst expectations. A short term run up in price following the quarterly earnings report will present an opportunity to book some short term profits. However, we do believe the company’s consistency in generating stable and growing earnings makes it a safe long term bet as long as the company is able to maintain its industry leading margins. The stock closed the last trading session at a price of $159.41, up 3.4% over the October 28th closing price. The stock had gained a further 6.8% in pre-market trade at the time of publishing.

To see Baidu’s current stock price, please click here: (NASDAQ: BIDU)

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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