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Baozun (BZUN) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Baozun Inc. BZUN is scheduled to report first-quarter 2019 results on May 29.

In the last reported quarter, the company’s non-GAAP net income per ADS was RMB 3.46 (50 cents), up 14% from the year-ago quarter.

The company’s revenues grossed to RMB 2,202 million ($320.3 million), up 41% from the year-earlier period.

For first-quarter 2019, the company expects revenues between RMB 1.25 billion and RMB 1.3 billion.

Let's see, how things are shaping up for the upcoming announcement.

Factors at Play

Baozun’s initiatives to strengthen its omnichannel matrix of solutions with the addition of innovative proprietary tools and its digital marketing services are likely to help the company boost its upcoming quarterly results.

A solid uptick in sales from the existing brand partners coupled with new brand partners under Baozun’s consignment model and the service fee model is a positive. This is likely to aid the company’s Services revenues, which per management will witness a 45% rise on a year-over-year basis.

Moreover, the growing popularity of brand partners’ products and the company’s effective marketing and promotional campaigns are likely to enhance its Product sales revenues.

A strong flourish in the e-commerce sector, backed by an emerging base of affluent middle-class Chinese consumers, is likely to improve growth.

Expansion of brand partners, mainly in the apparel, cosmetics and FMGC categories, is a key driver. Notably, Baozun’s number of brand partners grew to 185 at the end of the fourth quarter from 152 during the same period last year.

However, higher investments in lower-margin digital marketing services are an overhang on the company’s margins. Slowdown in China's economic growth coupled with US-China trade war are persistent woes.

Baozun Inc. Price and EPS Surprise

Baozun Inc. Price and EPS Surprise

Baozun Inc. price-eps-surprise | Baozun Inc. Quote

What the Model Says

The proven Zacks model clearly shows that the company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has maximum chances of beating estimates if it also has a positive Earnings ESP. While Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Baozun currently carries a Zacks Rank #3, which increases the predictive power of ESP, but has an Earnings ESP of 0.00% in the combination, which makes surprise prediction difficult for the stock this earnings season.

Key Picks

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in the upcoming releases:

Intuit Inc. INTU has an Earnings ESP of +0.57% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Science Applications International Corporation SAIC has an Earnings ESP of +5.52% and a Zacks Rank of 2.

GTT Communications, Inc. GTT has an Earnings ESP of +16.07% and a Zacks Rank of 3.

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