With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction that turns out to be exactly the wrong move.
Let's turn to Baidu . The Chinese search-engine giant has taken the world by storm with its growth, but China's recent economic slowdown has raised questions about how Baidu will keep expanding. Let's take an early look at what's been happening with Baidu over the past quarter and what we're likely to see in its quarterly report next Monday.
Stats on Baidu
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Can Baidu find the profits you're searching for?
Baidu has given investors some nice surprises recently, including substantial beats of $0.13 and $0.09 per share in the past two quarters. Analysts have been pretty comfortable with their initial guesses this time around, dropping EPS estimates by only a single penny in the past three months. But the stock has only moved minimally higher, rising about 2.5% since late October after a drop following its last earnings report.
Baidu has done an excellent job of walling off its dominant position in China. It has successfully fended off Google , which has become almost a non-player in the Chinese search space and has largely refocused its efforts toward securing its dominant status in the U.S. More recent competition from Qihoo 360 , which has gone beyond its traditional anti-virus software specialty to build a competing browser and search engine, could prove a bigger threat, but Baidu has fought back with measures to protect its competitive advantage.
But Baidu isn't content to stay within China. Earlier this month, it announced a partnership with France Telecom's Orange to build a mobile browser to cover the Africa, Middle East, and Asia region. With substantial growth in smartphone use in the AMEA region, Baidu hopes to take advantage of the expanding market while delivering solutions that will help customers reduce data use.
In assessing Baidu's earnings report, investors need to focus on whether and how long Baidu can sustain the huge growth rate that it has put up over the years. With the stock reflecting a cautious outlook, anything that shows the Chinese market bouncing back should be extremely positive for Baidu investors.
Beyond this earnings report, Baidu has plenty of long-term potential. Dig into the meat of Baidu's business plan by reading our brand-new premium report on the stock. Inside, you'll get our analyst's views on whether Baidu is a buy even with the competitive pressures it's facing. Don't wait; click here to access it now.
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The article Baidu Earnings: An Early Look originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Baidu, France Telecom, and Google. The Motley Fool owns shares of Baidu, France Telecom, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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