Yahoo Finance Those who invested in Baidu (NASDAQ:BIDU) three years ago are up 49%
Baidu, Inc. (NASDAQ:BIDU) shareholders might be concerned after seeing the share price drop 11% in the last month. But at least the stock is up over the last three years. However, it's unlikely many shareholders are elated with the share price gain of 49% over that time, given the rising market.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for Baidu
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Baidu was able to grow its EPS at 57% per year over three years, sending the share price higher. This EPS growth is higher than the 14% average annual increase in the share price. So it seems investors have become more cautious about the company, over time.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Baidu has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Baidu's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
While it's never nice to take a loss, Baidu shareholders can take comfort that their trailing twelve month loss of 9.5% wasn't as bad as the market loss of around 12%. What is more upsetting is the 8% per annum loss investors have suffered over the last half decade. This sort of share price action isn't particularly encouraging, but at least the losses are slowing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for Baidu you should be aware of.
We will like Baidu better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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