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Baidu (BIDU) to Report Q1 Earnings: What's in the Cards?

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Baidu, Inc. (BIDU - Free Report) is expected to report first-quarter 2020 results on May 18. In the last reported quarter, it delivered a positive earnings surprise of 2.7%.

The stock outperformed earnings estimates thrice and matched once in the last four quarters, with the average positive surprise being 24.97%.

Performance in the Last Reported Quarter

Baidu reported fourth-quarter 2019 non-GAAP earnings of $3.81 per share, which surpassed the Zacks Consensus Estimate by 10 cents.

Revenues of RMB28.9 billion ($4.15 billion) were up 3% sequentially and 6% year over year.

Estimates for Q1

Baidu expects total revenues in the range of RMB21 billion (or $3 billion) to RMB22.9 billion (or $3.3 billion), indicating a year-over-year decrease of 5-13%. The Zacks Consensus Estimate for revenues is pegged at $3.13 billion. 

The consensus mark for earnings is pegged at 64 cents per share, implying an increase of 56.1% from the year-ago reported figure.

Let’s see how things have shaped up for this announcement.

The company’s efforts to strengthen the mobile search engine and AI technologies are anticipated to have been key catalysts for top-line growth. Strong focus on leveraging the AI platform has been aiding it to provide an improved user experience.

Enhanced AI skills and DuerOS-supported smart devices portfolio that includes Xiaodu smart speakers are expected to have bolstered Baidu’s user base in the first quarter.

In addition, the company’s strengthening presence in the autonomous driving space has been acting as a key catalyst. Baidu’s autonomous driving licenses are expected to have aided the performance of the open-source autonomous vehicle technology platform, Apollo, in the to-be-reported quarter.

Further, strengthening mobile ecosystem is expected to have contributed to growth in average daily active user base of the Baidu App during the first quarter. Additionally, strong iQIYI segment — which offers online entertainment services — is expected to have aided the company’s performance.

However, COVID-19 impacts and China's slowing economy are expected to have hurt advertising sales in the quarter to be reported.

Further, mounting investment costs and increasing competition from players like Alibaba and Tencent’s WeChat are likely to get reflected in first-quarter results.

Baidu Inc Price and EPS Surprise

 

Earnings Whispers

Our proven model predicts an earnings beat for Baidu this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is the case here.

Earnings ESP: The company has an Earnings ESP of +4.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Baiduhas a Zacks Rank #3.

Other Stocks to Consider

Here are some other stocks that you may want to consider, as our model shows that these too have the right combination of elements to deliver a positive earnings surprise in the upcoming releases.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shopify Inc. (SHOP - Free Report) has an Earnings ESP of +40.25% and a Zacks Rank #2.

Inphi Corporation has an Earnings ESP of +3.96% and is a Zacks #2 Ranked stock.

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