Baidu will announce its second quarter results after the bell: what to expect

Chinese technology company (FXI) Baidu (BIDU) will announce its second-quarter results on August 19 after the market closes. Analysts expect BIDU to achieve a turnover of $ 3.66 billion for the quarter, down 2.2% from one year to the next. Its profits are expected to fall 71% to 0.87 dollar. Baidu has announced a turnover of $ 3.74 billion and earnings per share of $ 3.03 in the second quarter of 2018. Will BIDU be able to beat analysts' estimates in the second quarter of this year? Let's see how he behaved compared to the estimates of the past.

BIDU had EPS of $ 0.40 in the first quarter, 4.8% lower than the estimate of $ 0.42. In the fourth quarter of 2018, its EPS of 1.96 USD was 12% higher than the estimate of 1.75 USD. Baidu's EPS of $ 2.75 in the third quarter of 2018 was 13.6% higher than the estimate of $ 2.42, and its EPS of $ 3.03 in the second quarter of 2018 was 26.8% higher than the estimate of 2.39 USD.

The Baidu stock has gained nearly 9% today

Baidu shares climbed nearly 9% in the first trades on the market today. Investors were probably encouraged by the excellent results of the second quarter of Sina (SINA), published earlier in the day. Chinese tech giants Alibaba and JD.com also announced their second quarter results last week, easily beating Wall Street estimates.

Despite the recent recovery, BIDU has burned a considerable fortune for investors. The stock has lost 34% since the beginning of the year. Baidu investors have lost 62% since May 2018. In early August, Baidu shares fell below $ 100 for the first time in five years. Baidu, known as Google in China, is the country's leading search engine platform.

However, according to a Reuters report, ByteDance plans to launch its search engine in China, which will result in increased competition for Baidu. This new development could affect Baidu's sales. BIDU is also fighting against the slowdown in revenues due to the trade war and the sluggishness of its national economy. The gloomy economic environment has resulted in a decline in the number of corporate announcements on its platform.

The slowdown in revenues had a significant impact on Baidu's bottom line, resulting in a significant drop in inventory. Analysts expect Baidu's sales to rise only 0.1% in 2019. This increase would reflect a 59.3% drop in Baidu's profits this year. BIDU has a market capitalization of $ 36.4 billion, which is significantly lower than its valuation of $ 100 billion in May 2018.

Will Baidu's rally be sustainable? The company could regain sales growth in 2020, with sales estimated at $ 17.41 billion, up 14.4%. Analysts expect their BPA to rise by 59.4% in 2020 as well. Baidu's shares trade at a multiple of PE ahead of 16.4, indicating that equities are undervalued given their results in 2020.