Intrinsic value of Baidu ADR - BIDU

Previous Close

$221.05

  Intrinsic Value

$120.79

stock screener

  Rating & Target

sell

-45%

  Value-price divergence*

+559%

Previous close

$221.05

 
Intrinsic value

$120.79

 
Up/down potential

-45%

 
Rating

sell

 
Value-price divergence*

+559%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BIDU stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 77.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.28
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  10,207
  10,901
  11,623
  12,373
  13,154
  13,967
  14,814
  15,697
  16,617
  17,576
  18,578
  19,623
  20,715
  21,856
  23,049
  24,296
  25,601
  26,967
  28,396
  29,892
  31,460
  33,102
  34,822
  36,625
  38,514
  40,495
  42,572
  44,751
  47,035
  49,431
  51,944
Variable operating expenses, $m
 
  8,967
  9,546
  10,149
  10,775
  11,427
  12,107
  12,815
  13,553
  14,323
  15,126
  15,743
  16,619
  17,534
  18,491
  19,492
  20,539
  21,634
  22,781
  23,981
  25,239
  26,556
  27,936
  29,382
  30,898
  32,487
  34,154
  35,901
  37,734
  39,656
  41,672
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,753
  8,967
  9,546
  10,149
  10,775
  11,427
  12,107
  12,815
  13,553
  14,323
  15,126
  15,743
  16,619
  17,534
  18,491
  19,492
  20,539
  21,634
  22,781
  23,981
  25,239
  26,556
  27,936
  29,382
  30,898
  32,487
  34,154
  35,901
  37,734
  39,656
  41,672
Operating income, $m
  1,454
  1,934
  2,076
  2,225
  2,379
  2,540
  2,708
  2,882
  3,064
  3,254
  3,452
  3,880
  4,096
  4,322
  4,558
  4,805
  5,063
  5,333
  5,615
  5,911
  6,221
  6,546
  6,886
  7,243
  7,616
  8,008
  8,419
  8,849
  9,301
  9,775
  10,272
EBITDA, $m
  2,658
  2,380
  2,538
  2,702
  2,872
  3,050
  3,235
  3,427
  3,628
  3,838
  4,056
  4,285
  4,523
  4,772
  5,033
  5,305
  5,590
  5,888
  6,200
  6,527
  6,869
  7,228
  7,603
  7,997
  8,410
  8,842
  9,296
  9,771
  10,270
  10,793
  11,342
Interest expense (income), $m
  161
  175
  202
  231
  260
  291
  324
  357
  392
  429
  467
  506
  548
  591
  636
  684
  733
  785
  839
  896
  955
  1,017
  1,082
  1,150
  1,222
  1,297
  1,375
  1,458
  1,544
  1,635
  1,730
Earnings before tax, $m
  2,099
  1,759
  1,874
  1,994
  2,119
  2,249
  2,384
  2,525
  2,672
  2,825
  2,985
  3,374
  3,549
  3,731
  3,922
  4,121
  4,329
  4,548
  4,776
  5,016
  5,266
  5,529
  5,804
  6,092
  6,394
  6,711
  7,043
  7,392
  7,757
  8,140
  8,542
Tax expense, $m
  421
  475
  506
  538
  572
  607
  644
  682
  721
  763
  806
  911
  958
  1,007
  1,059
  1,113
  1,169
  1,228
  1,290
  1,354
  1,422
  1,493
  1,567
  1,645
  1,726
  1,812
  1,902
  1,996
  2,094
  2,198
  2,306
Net income, $m
  1,602
  1,284
  1,368
  1,456
  1,547
  1,642
  1,740
  1,843
  1,950
  2,062
  2,179
  2,463
  2,590
  2,724
  2,863
  3,008
  3,161
  3,320
  3,487
  3,661
  3,844
  4,036
  4,237
  4,447
  4,668
  4,899
  5,142
  5,396
  5,663
  5,942
  6,236

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,998
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  26,330
  15,573
  16,604
  17,676
  18,792
  19,953
  21,163
  22,424
  23,738
  25,109
  26,539
  28,033
  29,593
  31,223
  32,927
  34,709
  36,573
  38,524
  40,566
  42,703
  44,942
  47,288
  49,745
  52,321
  55,020
  57,850
  60,818
  63,929
  67,193
  70,616
  74,206
Adjusted assets (=assets-cash), $m
  13,332
  15,573
  16,604
  17,676
  18,792
  19,953
  21,163
  22,424
  23,738
  25,109
  26,539
  28,033
  29,593
  31,223
  32,927
  34,709
  36,573
  38,524
  40,566
  42,703
  44,942
  47,288
  49,745
  52,321
  55,020
  57,850
  60,818
  63,929
  67,193
  70,616
  74,206
Revenue / Adjusted assets
  0.766
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
  0.700
Average production assets, $m
  2,107
  2,246
  2,394
  2,549
  2,710
  2,877
  3,052
  3,234
  3,423
  3,621
  3,827
  4,042
  4,267
  4,502
  4,748
  5,005
  5,274
  5,555
  5,850
  6,158
  6,481
  6,819
  7,173
  7,545
  7,934
  8,342
  8,770
  9,219
  9,689
  10,183
  10,701
Working capital, $m
  7,762
  -1,090
  -1,162
  -1,237
  -1,315
  -1,397
  -1,481
  -1,570
  -1,662
  -1,758
  -1,858
  -1,962
  -2,072
  -2,186
  -2,305
  -2,430
  -2,560
  -2,697
  -2,840
  -2,989
  -3,146
  -3,310
  -3,482
  -3,662
  -3,851
  -4,050
  -4,257
  -4,475
  -4,703
  -4,943
  -5,194
Total debt, $m
  6,404
  5,772
  6,590
  7,440
  8,325
  9,246
  10,205
  11,205
  12,247
  13,334
  14,469
  15,653
  16,890
  18,183
  19,534
  20,947
  22,425
  23,972
  25,592
  27,287
  29,062
  30,922
  32,871
  34,913
  37,054
  39,298
  41,651
  44,119
  46,707
  49,421
  52,269
Total liabilities, $m
  12,981
  12,349
  13,167
  14,017
  14,902
  15,823
  16,782
  17,782
  18,824
  19,911
  21,046
  22,230
  23,467
  24,760
  26,111
  27,524
  29,002
  30,549
  32,169
  33,864
  35,639
  37,499
  39,448
  41,490
  43,631
  45,875
  48,228
  50,696
  53,284
  55,998
  58,846
Total equity, $m
  13,349
  3,224
  3,437
  3,659
  3,890
  4,130
  4,381
  4,642
  4,914
  5,198
  5,494
  5,803
  6,126
  6,463
  6,816
  7,185
  7,571
  7,974
  8,397
  8,840
  9,303
  9,789
  10,297
  10,830
  11,389
  11,975
  12,589
  13,233
  13,909
  14,617
  15,361
Total liabilities and equity, $m
  26,330
  15,573
  16,604
  17,676
  18,792
  19,953
  21,163
  22,424
  23,738
  25,109
  26,540
  28,033
  29,593
  31,223
  32,927
  34,709
  36,573
  38,523
  40,566
  42,704
  44,942
  47,288
  49,745
  52,320
  55,020
  57,850
  60,817
  63,929
  67,193
  70,615
  74,207
Debt-to-equity ratio
  0.480
  1.790
  1.920
  2.030
  2.140
  2.240
  2.330
  2.410
  2.490
  2.570
  2.630
  2.700
  2.760
  2.810
  2.870
  2.920
  2.960
  3.010
  3.050
  3.090
  3.120
  3.160
  3.190
  3.220
  3.250
  3.280
  3.310
  3.330
  3.360
  3.380
  3.400
Adjusted equity ratio
  0.095
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,602
  1,284
  1,368
  1,456
  1,547
  1,642
  1,740
  1,843
  1,950
  2,062
  2,179
  2,463
  2,590
  2,724
  2,863
  3,008
  3,161
  3,320
  3,487
  3,661
  3,844
  4,036
  4,237
  4,447
  4,668
  4,899
  5,142
  5,396
  5,663
  5,942
  6,236
Depreciation, amort., depletion, $m
  1,204
  447
  461
  477
  493
  510
  527
  545
  564
  584
  605
  404
  427
  450
  475
  501
  527
  556
  585
  616
  648
  682
  717
  754
  793
  834
  877
  922
  969
  1,018
  1,070
Funds from operations, $m
  4,036
  1,731
  1,830
  1,933
  2,040
  2,151
  2,267
  2,388
  2,515
  2,646
  2,784
  2,867
  3,017
  3,174
  3,338
  3,509
  3,688
  3,875
  4,072
  4,277
  4,492
  4,718
  4,954
  5,202
  5,461
  5,733
  6,019
  6,318
  6,632
  6,961
  7,306
Change in working capital, $m
  816
  -69
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
  -100
  -105
  -109
  -114
  -119
  -125
  -130
  -137
  -143
  -150
  -157
  -164
  -172
  -180
  -189
  -198
  -208
  -218
  -228
  -240
  -251
Cash from operations, $m
  3,220
  1,800
  1,902
  2,008
  2,118
  2,233
  2,352
  2,477
  2,607
  2,742
  2,884
  2,972
  3,126
  3,288
  3,457
  3,633
  3,818
  4,012
  4,215
  4,427
  4,649
  4,882
  5,126
  5,382
  5,650
  5,931
  6,226
  6,536
  6,860
  7,200
  7,557
Maintenance CAPEX, $m
  0
  -211
  -225
  -239
  -255
  -271
  -288
  -305
  -323
  -342
  -362
  -383
  -404
  -427
  -450
  -475
  -501
  -527
  -556
  -585
  -616
  -648
  -682
  -717
  -754
  -793
  -834
  -877
  -922
  -969
  -1,018
New CAPEX, $m
  -1,520
  -139
  -149
  -155
  -161
  -167
  -174
  -182
  -190
  -198
  -206
  -215
  -225
  -235
  -246
  -257
  -269
  -281
  -294
  -308
  -323
  -338
  -354
  -371
  -389
  -408
  -428
  -449
  -471
  -494
  -518
Cash from investing activities, $m
  -5,195
  -350
  -374
  -394
  -416
  -438
  -462
  -487
  -513
  -540
  -568
  -598
  -629
  -662
  -696
  -732
  -770
  -808
  -850
  -893
  -939
  -986
  -1,036
  -1,088
  -1,143
  -1,201
  -1,262
  -1,326
  -1,393
  -1,463
  -1,536
Free cash flow, $m
  -1,975
  1,450
  1,529
  1,614
  1,702
  1,794
  1,890
  1,990
  2,094
  2,202
  2,316
  2,374
  2,497
  2,626
  2,761
  2,902
  3,049
  3,203
  3,365
  3,534
  3,710
  3,896
  4,090
  4,293
  4,506
  4,730
  4,964
  5,210
  5,468
  5,738
  6,021
Issuance/(repayment) of debt, $m
  991
  785
  818
  850
  885
  921
  959
  1,000
  1,042
  1,087
  1,134
  1,184
  1,237
  1,293
  1,351
  1,413
  1,478
  1,547
  1,619
  1,695
  1,776
  1,860
  1,949
  2,042
  2,141
  2,244
  2,353
  2,468
  2,588
  2,714
  2,847
Issuance/(repurchase) of shares, $m
  121
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,090
  785
  818
  850
  885
  921
  959
  1,000
  1,042
  1,087
  1,134
  1,184
  1,237
  1,293
  1,351
  1,413
  1,478
  1,547
  1,619
  1,695
  1,776
  1,860
  1,949
  2,042
  2,141
  2,244
  2,353
  2,468
  2,588
  2,714
  2,847
Total cash flow (excl. dividends), $m
  136
  2,236
  2,346
  2,464
  2,587
  2,715
  2,849
  2,989
  3,136
  3,289
  3,450
  3,558
  3,734
  3,919
  4,112
  4,315
  4,527
  4,750
  4,984
  5,229
  5,486
  5,756
  6,039
  6,336
  6,647
  6,974
  7,317
  7,677
  8,055
  8,452
  8,869
Retained Cash Flow (-), $m
  -1,738
  -206
  -213
  -222
  -231
  -240
  -250
  -261
  -272
  -284
  -296
  -309
  -323
  -337
  -353
  -369
  -386
  -404
  -423
  -443
  -463
  -486
  -509
  -533
  -559
  -586
  -614
  -644
  -676
  -709
  -743
Prev. year cash balance distribution, $m
 
  10,331
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  12,361
  2,133
  2,242
  2,356
  2,475
  2,599
  2,728
  2,864
  3,006
  3,154
  3,249
  3,411
  3,581
  3,759
  3,946
  4,141
  4,346
  4,561
  4,786
  5,022
  5,270
  5,530
  5,802
  6,088
  6,388
  6,703
  7,033
  7,380
  7,744
  8,125
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  11,852
  1,952
  1,951
  1,940
  1,918
  1,886
  1,843
  1,790
  1,727
  1,653
  1,543
  1,456
  1,362
  1,262
  1,158
  1,052
  946
  840
  737
  638
  545
  459
  380
  310
  249
  196
  151
  114
  85
  61
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Baidu, Inc. provides Internet search services in China and internationally. It operates through Search Services, Transaction Services, and IQiyi segments. It offers Chinese language search platform on its Baidu.com Website that enables users to find relevant information online, including Web pages, news, images, documents, and multimedia files through links provided on its Website; and transaction platform, including Nuomi.com to connect online and offline services provided by third-parties. The company also provides transaction services, such as Baidu Nuomi, Baidu Takeout Delivery, Baidu Maps, Baidu Connect, Baidu Wallet, and others; and iQiyi, an online video platform with a content library that includes licensed movies, television series, cartoons, shows, and other programs. In addition, it offers auction-based P4P services; and online marketing services based on search queries, contextuals, audience attributes, media and placement attributes, and other forms; and value-added consultative services. The company serves online marketing customers, including SMEs, large domestic companies, and Chinese divisions and subsidiaries of multinational corporations operating in the retail and ecommerce, local services, medical and healthcare, financial services, education, tourism and ticketing, online games, transportation, business services, and construction and decoration industries. It sells its search and transaction services directly, as well as through its distribution network. The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in December 2008. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People’s Republic of China.

FINANCIAL RATIOS  of  Baidu ADR (BIDU)

Valuation Ratios
P/E Ratio 4.8
Price to Sales 0.8
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 2.4
Price to Free Cash Flow 4.5
Growth Rates
Sales Growth Rate 6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 35.1%
Cap. Spend. - 3 Yr. Gr. Rate 23.3%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 37.4%
Total Debt to Equity 48%
Interest Coverage 14
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 17%
Return On Total Capital 8.8%
Ret/ On T. Cap. - 3 Yr. Avg. 21.1%
Return On Equity 12.8%
Return On Equity - 3 Yr. Avg. 31%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 56.7%
EBITDA Margin 33.9%
EBITDA Margin - 3 Yr. Avg. 46.7%
Operating Margin 14.2%
Oper. Margin - 3 Yr. Avg. 19.3%
Pre-Tax Margin 20.6%
Pre-Tax Margin - 3 Yr. Avg. 35.7%
Net Profit Margin 15.7%
Net Profit Margin - 3 Yr. Avg. 30.9%
Effective Tax Rate 20.1%
Eff/ Tax Rate - 3 Yr. Avg. 16.6%
Payout Ratio 0%

BIDU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BIDU stock intrinsic value calculation we used $10207 million for the last fiscal year's total revenue generated by Baidu ADR. The default revenue input number comes from 2016 income statement of Baidu ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BIDU stock valuation model: a) initial revenue growth rate of 6.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BIDU is calculated based on our internal credit rating of Baidu ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Baidu ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BIDU stock the variable cost ratio is equal to 82.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BIDU stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Baidu ADR.

Corporate tax rate of 27% is the nominal tax rate for Baidu ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BIDU stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BIDU are equal to 20.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Baidu ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BIDU is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13349 million for Baidu ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 349.227 million for Baidu ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Baidu ADR at the current share price and the inputted number of shares is $77.2 billion.

RELATED COMPANIES Price Int.Val. Rating
GOOGL Alphabet Cl A 927.66 981.76  hold
SOHU Sohu.com 53.58 6.60  str.sell
YY YY ADR 71.45 352.38  str.buy
YNDX Yandex 30.34 32.84  hold
SINA Sina 98.16 95.85  hold
NTES Netease ADR 273.60 4,505.92  str.buy
XNET Xunlei ADR 4.05 2.91  hold

COMPANY NEWS

▶ 3 Top Deep Learning Stocks to Buy Now   [07:19AM  Motley Fool]
▶ Chinas Economy Just Gets More and More Interesting   [Aug-14-17 09:36AM  Fortune]
▶ NVIDIA -- When 56% Revenue Growth Isn't Enough   [Aug-12-17 08:47AM  Motley Fool]
▶ [$$] China Targets Social-Media Giants WeChat, Weibo inCybersecurity Probe   [Aug-11-17 11:27PM  The Wall Street Journal]
▶ What the NVIDIABaidu Partnership Implies   [10:36AM  Market Realist]
▶ These Techs Have Left FAANG Stocks in the Dust   [Aug-09-17 02:30PM  Investopedia]
▶ Coursera Co-Founder Ng Says AI Is the New Electricity   [Aug-08-17 07:12PM  Bloomberg Video]
▶ Will ASIC Chips Become The Next Big Thing In AI?   [Aug-04-17 09:18AM  Forbes]
▶ Why Baidu Jumped Nearly 26% in July   [Aug-03-17 09:40AM  Motley Fool]
▶ Chinese stocks are getting slammed   [Aug-02-17 12:17PM  Yahoo Finance]
▶ Short Baidu Inc (ADR) (BIDU) Stock Without the Risk   [Aug-01-17 10:15AM  InvestorPlace]
▶ Stocks Open Strong For July Finish; 2 China Names Soar   [09:44AM  Investor's Business Daily]
▶ Baidu: Nomura Upgrades to Buy   [03:16AM  Barrons.com]
▶ 3 Tech Stocks I'd Buy Right Now   [Jul-30-17 02:06PM  Motley Fool]
▶ Why Boston Beer, Baidu, and First Solar Jumped Today   [Jul-28-17 04:30PM  Motley Fool]
▶ Why Baidu Stock Gained 10% Today   [04:27PM  Motley Fool]
▶ [$$] Baidu's Search for Better Revenue Growth Continues   [02:43AM  The Wall Street Journal]
▶ [$$] Baidu Profit Rises in Rebound From Beijing Crackdown   [12:55AM  The Wall Street Journal]
▶ Baidu Search Ads Recover From Restrictions   [Jul-27-17 11:38PM  Bloomberg Video]
▶ Baidu's Annus Horribilis Pays Off   [11:05PM  Bloomberg]
▶ Baidu Inc. beats 2Q profit forecasts   [09:55PM  Associated Press]
▶ Baidu Stock Hits New Highs After Earnings   [09:04PM  Motley Fool]
▶ Baidu Stock Rises On Strong 2Q Earnings   [07:04PM  Barrons.com]
▶ Baidu ADRs rally 7% after earnings beat   [05:32PM  MarketWatch]
▶ Baidu Earnings Top Views, Ease Worries Over Investments   [05:30PM  Investor's Business Daily]
▶ PayPal Beats Estimates for the 2nd Quarter   [04:34PM  GuruFocus.com]
▶ Are Talking Speakers the First AI Bubble?   [01:17PM  Investopedia]
▶ Futures: Handle These 4 Stocks In Buy Zones With Care   [06:53AM  Investor's Business Daily]
▶ 4 Big Earnings You Can't Miss Thursday: Investing Action Plan   [04:15PM  Investor's Business Daily]
Stock chart of BIDU Financial statements of BIDU
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.