Yahoo Finance Does Baozun Inc’s (NASDAQ:BZUN) Recent Track Record Look Strong?
For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Baozun Inc (NASDAQ:BZUN) useful as an attempt to give more color around how Baozun is currently performing. Check out our latest analysis for Baozun
How Well Did BZUN Perform?
BZUN’s trailing twelve-month earnings (from 31 March 2018) of US$213.19m has more than doubled from US$86.63m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 70.83%, indicating the rate at which BZUN is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely a result of an industry uplift, or if Baozun has experienced some company-specific growth.
In the past couple of years, Baozun increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Inspecting growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 17.40% over the previous year, and 18.02% over the previous five years. This means that whatever tailwind the industry is profiting from, Baozun is capable of amplifying this to its advantage.
In terms of returns from investment, Baozun has not invested its equity funds well, leading to a 11.59% return on equity (ROE), below the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.38% is below the US Internet industry of 7.42%, indicating Baozun’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Baozun’s debt level, has increased over the past 3 years from -11.94% to 14.14%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 14.39% to 10.33% over the past 5 years.
What does this mean?
Baozun’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Baozun gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Baozun to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for BZUN’s future growth? Take a look at our free research report of analyst consensus for BZUN’s outlook.
Financial Health: Is BZUN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
