When you look at BAIDU INC - SPON ADR (NASDAQ:BIDU), it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Our stock screening tool has identified BAIDU INC - SPON ADR (NASDAQ:BIDU) as an undervalued gem with strong fundamentals. BIDU boasts decent financial health and profitability while maintaining an attractive price point. We'll break it down further.

How We Gauge Valuation for BIDU

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. BIDU scores a 7 out of 10:

• BIDU is valuated reasonably with a Price/Earnings ratio of 8.26.
• Compared to the rest of the industry, the Price/Earnings ratio of BIDU indicates a rather cheap valuation: BIDU is cheaper than 88.57% of the companies listed in the same industry.
• BIDU is valuated cheaply when we compare the Price/Earnings ratio to 24.12, which is the current average of the S&P500 Index.
• A Price/Forward Earnings ratio of 8.45 indicates a reasonable valuation of BIDU.
• Based on the Price/Forward Earnings ratio, BIDU is valued cheaper than 88.57% of the companies in the same industry.
• The average S&P500 Price/Forward Earnings ratio is at 20.42. BIDU is valued rather cheaply when compared to this.
• 95.71% of the companies in the same industry are more expensive than BIDU, based on the Enterprise Value to EBITDA ratio.
• Based on the Price/Free Cash Flow ratio, BIDU is valued a bit cheaper than the industry average as 67.14% of the companies are valued more expensively.
• BIDU has an outstanding profitability rating, which may justify a higher PE ratio.

What does the Profitability looks like for BIDU

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. BIDU was assigned a score of 8 for profitability:

• Looking at the Return On Assets, with a value of 5.42%, BIDU is in the better half of the industry, outperforming 78.57% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 8.79%, BIDU belongs to the top of the industry, outperforming 84.29% of the companies in the same industry.
• BIDU has a better Return On Invested Capital (5.06%) than 75.71% of its industry peers.
• The 3 year average ROIC (4.93%) for BIDU is below the current ROIC(5.06%), indicating increased profibility in the last year.
• BIDU has a better Profit Margin (17.41%) than 87.14% of its industry peers.
• In the last couple of years the Profit Margin of BIDU has grown nicely.
• The Operating Margin of BIDU (15.98%) is better than 84.29% of its industry peers.
• In the last couple of years the Operating Margin of BIDU has grown nicely.
• BIDU's Gross Margin has improved in the last couple of years.

Evaluating Health: BIDU

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For BIDU, the assigned 5 for health provides valuable insights:

• With a decent Altman-Z score value of 2.12, BIDU is doing good in the industry, outperforming 65.71% of the companies in the same industry.
• BIDU has a Debt/Equity ratio of 0.24. This is a healthy value indicating a solid balance between debt and equity.
• BIDU has a Current Ratio of 2.09. This indicates that BIDU is financially healthy and has no problem in meeting its short term obligations.
• A Quick Ratio of 2.09 indicates that BIDU has no problem at all paying its short term obligations.

Deciphering BIDU's Growth Rating

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. BIDU has received a 4 out of 10:

• BIDU shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.10% yearly.
• BIDU is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 11.33% yearly.
• The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
• When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Check the latest full fundamental report of BIDU for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.