For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a 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.
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How BZUN fared against its long-term earnings performance and its industry
BZUN's trailing twelve-month earnings (from 31 December 2018) of CN¥270m has jumped 29% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 75%, indicating the rate at which BZUN is growing has slowed down. To understand what's happening, let's examine what's occurring with margins and if the whole industry is feeling the heat.
In terms of returns from investment, Baozun has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 6.8% exceeds the US Online Retail industry of 5.4%, indicating Baozun has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Baozun’s debt level, has increased over the past 3 years from 0.7% to 16%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Baozun has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend 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: Are 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 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.