Baidu has a current market cap of $32.57 billion. The stock trades at a forward P/E of 14.88 and has a PEG ratio less than 1 at 0.88. The company’s current operating margin is 46.52% and return on equity is 44.08%. On the balance sheet, there’s $5.39 billion in cash to $1.90 billion in debt.
Over the past year, the stock is down almost 25%. Of the analysts that follow the stock, six have it rated as a Strong Buy, nine a Buy, 10 a Hold, three an Underperform, and two a Sell. Price targets on the stock range from $75 to $180 with $107.50 as the median target.
In looking at Baidu’s U.S. competitor Google, we see that Google has a much larger market cap at $291.13 billion. Google also trades with a much higher forward P/E of 16.51 and its PEG ratio is greater than 1 at 1.27. Google has lower margins with an operating margin of 25.30% and return on equity of only 16.36%. Where Baidu.com, Inc. (ADR) (NASDAQ:BIDU)‘s stock is down over past year, Google’s stock price is up over 43%. Better margins and a discounted stock price make Baidu a better buy over Google.
The valuations for internet companies in China are indeed attractive and Baidu represents the best of the bunch. As Google has come to dominate the U.S. market, look for Baidu to do the same in China. With the stock down over 25% in the past year, this is a great dip for investors to buy for the long-term.
The article Now Is the Time to Buy This Internet Giant originally appeared on Fool.com and is written by Mark Yagalla.
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