This Just In: Upgrades and Downgrades – Baidu.com, Inc. (ADR) (BIDU)

But here’s the thing: Even after its recent post-earnings sell-off, Yandex still costs 31.4 times earnings. That means the stock isn’t actually cheaper than Google (24.7 times earnings). It’s just a bit less expensive than it was prior to earnings.

In contrast, Baidu at a mere 18.6 times earnings looks objectively cheap — relative to Google, relative to Yandex, and relative to a lot of companies, actually. And no matter what Goldman says, and no matter what Citi or CLSA say, either, the majority of analysts who follow these Internet search companies agree that of the three “Google-like” companies, Baidu is still the fastest grower of the bunch.

Analysts estimates currently have Baidu pegged for a profit growth rate of better than 30% annually over the next five years. That’s three points better than the 27% rate assigned to Yandex, and more than twice the growth rate ascribed to Google.

Foolish takeaway
Should you be worried about the growing pessimism over Baidu among marquee-name investment bankers? Actually, I don’t think so. To the contrary, maybe you should be getting more excited about the stock the less enthused Wall Street becomes.

Priced at the lowest P/E ratio of the big three search firms named, but boasting the highest growth rate of the bunch, Baidu doesn’t look to me like a stock you should bail on. Instead, Baidu looks like a bargain.

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The article This Just In: Upgrades and Downgrades originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Baidu, Goldman Sachs, Google, and Yandex. The Motley Fool owns shares of Baidu and Google.

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