Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Chinese search giant Baidu.com (NASDAQ: BIDU ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Baidu and see what CAPS investors are saying about the stock right now.
Baidu facts
| Headquarters (founded) | Beijing (2000) |
| Market Cap | $30.0 billion |
| Industry | Internet information providers |
| Trailing-12-Month Revenue | $3.6 billion |
| Management | Co-Founder/Chairman/CEO Yanhong Li CFO Jennifer Li |
| Return on Equity (average, past 3 years) | 51.6% |
| Cash/Debt | $5.2 billion / $1.9 billion |
| Competitors | SINA Sohu.com |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 89% of the 5,372 members who have rated Baidu believe the stock will outperform the S&P 500 going forward.
Just yesterday, fellow Fool Simon Erickson (TMFInnovator) summed up the Baidu bull case for our community:
- Success begets success. Baidu is the dominant search engine in China, with nearly 3/4 of unique search visits. As Google proved in the US, users will gravitate to the most efficient product that provides the best search results. This, in turn, attracts more advertising revenue. The network effect, in full effect.
- Baidu has had a successful initial campaign into mobile, accounting for ~50% of mobile search in China. They are investing heavily in this platform, trying to maximize user experience. Deals with China Telecom and China Unicom have been negotiated for Baidu to be the default search provider.
Risks include potential up-and-coming search competitors. ... A friend of mine living in China said that [Baidu] was the more "formal" search engine, but that there were in fact others that users would sometimes go to instead (the example he gave was to find pirated mp3s). From at least this one perspective, it seems that Baidu has a strong business reputation for search in China.
Consensus estimates for 2013 earnings are $5.34, which puts Baidu's forward P/E at only 16. But this is a growth company with tons of potential ways to monetize (optionality), and I believe the valuation to be far too low.
Regardless of your short-term view on the Chinese economy, there may be opportunity in Baidu (aka the "Chinese Google"). Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.
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