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Is a Surprise in Store for Baidu (BIDU) in Q3 Earnings?
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Baidu, Inc. (BIDU - Free Report) is set to report third-quarter 2016 results on Oct 27. Last quarter, the company posted an impressive 11.70% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors at Play
Baidu posted strong second-quarter results, with both the top and the bottom lines beating the respective Zacks Consensus Estimate.
Baidu’s increasing presence in the online video market is likely to improve its competitive position. Also, the company’s strong dominance in the mobile search market and its consistent product development efforts remain positives. The company continues to strengthen its offerings through various agreements in China, where it is pitted against the country’s biggest e-Commerce operator, Alibaba Group Holding Limited.
However, increasing competition on its own search platform and higher expenses incurred from new investments could affect top-line growth in the to-be-reported quarter.
Also, for the third quarter, management expects revenues in the range of RMB18.040 billion ($2.714 billion) to RMB18.580 billion ($2.796 billion), representing a year-over-year decrease of 1.9% to an increase of 1.1%.
Our proven model does not conclusively show that Baidu will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 87 cents. Therefore, the company’s Earnings ESP is 0.00%.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Baidu has a Zacks Rank #3, which increases the power of surprise prediction. But a 0.00% ESP makes surprise prediction.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
Here are some stocks which you may consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Ashford Hospitality Prime, Inc. is slated to report third-quarter earnings results on Nov 2. The company has an Earnings ESP of +9.76% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alibaba Group Holding Limited (BABA - Free Report) with an Earnings ESP of +2.13% and a Zacks Rank #1. The company is slated to report second-quarter fiscal 2017 earnings results on Nov 2.
Avon Products Inc. with an Earnings ESP of +33.33% and a Zacks Rank #1. The company is slated to report third-quarter earnings results on Nov 3.
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Is a Surprise in Store for Baidu (BIDU) in Q3 Earnings?
Baidu, Inc. (BIDU - Free Report) is set to report third-quarter 2016 results on Oct 27. Last quarter, the company posted an impressive 11.70% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors at Play
Baidu posted strong second-quarter results, with both the top and the bottom lines beating the respective Zacks Consensus Estimate.
Baidu’s increasing presence in the online video market is likely to improve its competitive position. Also, the company’s strong dominance in the mobile search market and its consistent product development efforts remain positives. The company continues to strengthen its offerings through various agreements in China, where it is pitted against the country’s biggest e-Commerce operator, Alibaba Group Holding Limited.
However, increasing competition on its own search platform and higher expenses incurred from new investments could affect top-line growth in the to-be-reported quarter.
Also, for the third quarter, management expects revenues in the range of RMB18.040 billion ($2.714 billion) to RMB18.580 billion ($2.796 billion), representing a year-over-year decrease of 1.9% to an increase of 1.1%.
BAIDU INC Price and EPS Surprise
BAIDU INC Price and EPS Surprise | BAIDU INC Quote
Earnings Whispers
Our proven model does not conclusively show that Baidu will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 87 cents. Therefore, the company’s Earnings ESP is 0.00%.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Baidu has a Zacks Rank #3, which increases the power of surprise prediction. But a 0.00% ESP makes surprise prediction.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
Here are some stocks which you may consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Ashford Hospitality Prime, Inc. is slated to report third-quarter earnings results on Nov 2. The company has an Earnings ESP of +9.76% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alibaba Group Holding Limited (BABA - Free Report) with an Earnings ESP of +2.13% and a Zacks Rank #1. The company is slated to report second-quarter fiscal 2017 earnings results on Nov 2.
Avon Products Inc. with an Earnings ESP of +33.33% and a Zacks Rank #1. The company is slated to report third-quarter earnings results on Nov 3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>