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Baozun (NASDAQ:BZUN) Shareholders Have Enjoyed A Whopping 409% Share Price Gain

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  • BZUN

Baozun Inc. (NASDAQ:BZUN) shareholders might be concerned after seeing the share price drop 12% in the last month. But over five years returns have been remarkably great. Indeed, the share price is up a whopping 409% in that time. Arguably, the recent fall is to be expected after such a strong rise. But the real question is whether the business fundamentals can improve over the long term.

View our latest analysis for Baozun

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the five years of share price growth, Baozun moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. We can see that the Baozun share price is down 4.7% in the last three years. Meanwhile, EPS is up 34% per year. So there seems to be a mismatch between the positive EPS growth and the change in the share price, which is down -1.6% per year.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

It is of course excellent to see how Baozun has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Baozun stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Baozun shareholders are down 1.3% for the year, but the market itself is up 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 38% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Baozun better, we need to consider many other factors. Even so, be aware that Baozun is showing 1 warning sign in our investment analysis , you should know about...

But note: Baozun may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.