Baidu looks pretty strong with this investments and growth opportunities that should create growth for top as well as bottom lines going forward. The analysts expect its earnings to grow at CAGR of 37.75%, greater than average industry CAGR of 20.40% for the next five years. This clearly reflects attractive returns for the stock in the long-run. Also, the stock carries short-term returns as its earnings will grow 28.50% this year and 36.80% by next year respectively.
The stock still carries cheap valuations. Its trailing P/E of 39.0 and forward P/E of 4.36 establish strong earnings growth in the future. Moreover, it has PEG ratio of 0.98 that continues to support its growth over the coming years. It has pretty healthy history for its performance and wealth metrics. Its profit and operating profit margins are 28.62% and 28.28% respectively, while its ROE stands at impressive 27.88% for trailing twelve months. Its balance sheet carries total cash of $8.30 billion, which is quite enough to cover its total debt of $3.91 billion.
More catalysts
Additionally, the company is focusing on several growth areas by investing in product development. For example, Baidu Connect is an industry-tailored, user-friendly, click-to-action interface that is gaining traction in the market. It has discover button in the Mobile Baidu 6.0 or the nearby button in Baidu Maps. This world-class interface facility will help the merchants around the world to fetch new customers to their stores and maintain engagement with the existing ones. Mobile Baidu 6.0 and Mobile Baidu Map reveal incredible growth for Baidu going forward.
Mobile Baidu 6.0 enjoys a breakthrough features in the Discover button. Both these mobile Baidu Discover function and its nearby feature, mobile map, enable the users to go for personalized recommendation and promotional offers based on the user's interests, time of the day, and location.
The company sees incredible growth opportunity for its products and services in the developing countries with entrenched industries and players. This should undeniably generate remarkable revenue for the company and create value for shareholders in the long-run.
