It Trades at Only 6x 2020 Earnings

by Johnny Debacle

Baidu (NASDAQ: BIDU) trades at 122x on a trailing PE basis. LTM earning per share are $2.88 and the stock trades at $329. Think about it. There are 1 billion people in China, I know, yes I know. Also I am familiar with the well know equation that Google + China = 122x. But let’s be serious here. 122x!

They can have all the market share, be in the best most profitable industry in the history of mankind and have all the people in their market they want, but if they aren’t actually making much money off of it despite trying for several years now, doesn’t that tell people something? Maybe, a small clue?

But reason isn’t enough in analyzing investments. Consider that the stock trades at a conservative 6x expected 2020 earnings. You need to make these kind of adjustments in your analysis if you ever want to be able to participate in a herd.

Recommendation: Sometimes the herd goes right off the cliff. But sometimes the herd kills the bad cowboy when the good cowboy lets the herd lose to distract or incapacitate the bad cowboy. Other times the herd stops and eats grass and enjoys a beautiful sunny day in the plains, soaking in life without a care in the world. Long all that.

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