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Last update on 2024-06-07

Baidu (BIDU) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Baidu (BIDU) achieves an outstanding Piotroski F-Score of 8/9 in 2023, reflecting strong profitability, liquidity, and operational performance.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 8

We're running Baidu (BIDU) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The analysis of Baidu (BIDU) using the Piotroski F-Score involves checking profitability, liquidity, and operating efficiency across 9 criteria. Baidu scores 8 out of 9 points, indicating a strong financial position. The criteria met include positive net income, positive cash flow from operations, increasing return on assets, higher operating cash flow than net income, declining leverage, an increasing current ratio, increasing gross margin, and growing asset turnover. The only criterion not met was the increase in outstanding shares, which indicated dilution.

Insights for Value Investors Seeking Stable Income

Based on Baidu's high Piotroski F-Score of 8, it shows strong profitability, liquidity, and efficient operations which are good indicators for potential investors. The solid financial health, coupled with steady operational performance, makes Baidu a viable stock to consider for investment. However, keep an eye on the slight share dilution issue which might affect long-term value slightly.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Baidu (BIDU)

Company has a positive net income?

Check if the company has positive Netincome. It's fundamental in the Piotroski Analysis to determine if the company can generate regular earnings.

Historical Net Income of Baidu (BIDU)

Baidu (BIDU) has a Netincome of ¥20.32 billion in 2023. Given that the Netincome is positive, Baidu earns 1 point for this criterion. Historically, Baidu has shown fluctuations in its Netincome over the past 20 years, with a significant drop in 2003, 2005, and 2010. However, the trend has been mostly upward, highlighting Baidu's ability to generate profitable operations, though with some notable variability. This positive result is consistent with the company's trends over the last two decades where it has had more positive than negative years, indicating a fundamental strength.

Company has a positive cash flow?

The criterion is to check if Baidu's (BIDU) cash flow from operations (CFO) in 2023 is positive, which would add 1 point.

Historical Operating Cash Flow of Baidu (BIDU)

The Cash Flow from Operations (CFO) of Baidu in 2023 is 36,615,000,000, which is clearly positive. Reviewing historical data, Baidu has consistently shown a positive cash flow from operations over the past twenty years, with the figures steadily rising, particularly from 2011 onward. This continuous increase reinforces the financial robustness and efficiency of the company's core operations. Hence, according to the Piotroski Score criteria, Baidu secures 1 point for this indicator. Overall, this trend is decidedly positive and suggests strong operational cash generation capacity.

Return on Assets (ROA) are growing?

The Change in Return on Assets (ROA) criterion measures the company's efficiency in generating profits from its assets year over year.

Historical change in Return on Assets (ROA) of Baidu (BIDU)

For Baidu (BIDU), the ROA saw a notable increase from 0.0196 in 2022 to 0.0509 in 2023. This marks a substantial improvement and warrants a score of 1 according to the Piotroski Analyses. This increase indicates better efficiency in utilizing its assets to generate profit. It's important to recognize this trend in the context of the last 20 years. While the industry's median ROA has fluctuated slightly, it has consistently hovered much higher, around 0.645 on average. Baidu's recent improvement is a positive sign, suggesting that the company is moving towards greater operational efficiency, albeit still lagging behind the industry median.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) higher than Net Income indicates a company's positive operating efficiency.

Historical accruals of Baidu (BIDU)

For 2023, Baidu's Operating Cash Flow (OCF) stands at ¥36.61 billion, whereas the Net Income is ¥20.32 billion. Since the OCF is significantly higher than Net Income, this points to Baidu's strong operational performance. When looking at historical data, Baidu shows a trend where OCF often exceeds Net Income, particularly in recent years. This implies good cash-generating ability, which is positive for future growth and financial stability. As a result, Baidu earns 1 point for this criterion.

Liquidity of Baidu (BIDU)

Leverage is declining?

The criterion compares the leverage ratios from two consecutive years and examines if the ratio has decreased.

Historical leverage of Baidu (BIDU)

From 2022 to 2023, Baidu's leverage decreased from 0.1739 to 0.1534, indicating an improvement in its financial leverage. This trend reflects a reduced reliance on debt financing and a stronger balance sheet. Over the last two decades, Baidu's leverage reached a peak of 0.2296 in 2015, followed by a general downtrend, culminating in the favorable leverage of 0.1534 in 2023. Consequently, this criterion adds a point to Baidu's Piotroski score, as the leverage did decrease, signaling prudent financial management.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover short-term obligations with its short-term assets. It's a key liquidity metric for investors.

Historical Current Ratio of Baidu (BIDU)

Baidu's (BIDU) Current Ratio has increased from 2.673 in 2022 to 3.0118 in 2023. The rise in the Current Ratio indicates improved liquidity, which makes the company better positioned to meet its short-term liabilities. Over the last 20 years, Baidu has had fluctuations in its Current Ratio, peaking at 7.1267 in 2005, and hitting a low of 1.8422 in 2017. In comparison, the industry median has generally been lower, fluctuating less. For instance, the industry median current ratio was highest at 4.4318 in 2008 and lowest at 1.9051 in 2022. In 2023, the industry median current ratio stands at 2.2043, which is significantly lower than Baidu's 3.0118. Given this increase and performance above the industry median, we will add 1 point for this criterion.

Number of shares not diluted?

Change in Shares Outstanding examines whether the company has issued new shares or bought back shares, impacting shareholders' ownership.

Historical outstanding shares of Baidu (BIDU)

In 2023, Baidu had 350,875,000 outstanding shares compared to 347,750,000 in 2022, indicating an increase. Therefore, this criterion is not met, and no point is awarded. Historically, Baidu's shares have fluctuated, with a noticeable increase during certain years such as from 2013 to 2014. This trend might reflect equity financing or incentive plans. However, from a Piotroski perspective, an increasing share count can be seen as dilution which is generally unfavorable for existing shareholders. Thus, no point for this criterion.

Operating of Baidu (BIDU)

Cross Margin is growing?

Gross Margin change measures a company's ability to produce goods at a lower cost compared to its revenue. A positive change indicates improved efficiency.

Historical gross margin of Baidu (BIDU)

Baidu's Gross Margin increased from 0.483 in 2022 to 0.5169 in 2023. This increase results in an addition of 1 point for the Piotroski score. The rise reflects an enhanced ability to produce profit relative to cost, which is favorable for Baidu. The last 20 years show fluctuation, but the current trend underscores significant efficiency gains especially compared to the industry median Gross Margin which stood at 0.7025.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales. It is calculated as sales revenue divided by total assets.

Historical asset turnover ratio of Baidu (BIDU)

Comparing Baidu's (BIDU) Asset Turnover of 0.3375 in 2023 to its 2022 ratio of 0.3208, we see an increase. This appears favorable, pointing to enhanced efficiency in generating sales from assets. Over the last 20 years, Baidu's Asset Turnover has shown varying trends but stands improved from the heavy dip during the tech slump years of the mid-2010s. This positive movement adds 1 point to the Piotroski score.


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