Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.02
    +1.67 (+2.05%)
     
  • Gold

    2,242.10
    +29.40 (+1.33%)
     
  • Silver

    25.00
    +0.24 (+0.98%)
     
  • EUR/USD

    1.0789
    -0.0041 (-0.38%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2620
    -0.0018 (-0.14%)
     
  • USD/JPY

    151.3910
    +0.1450 (+0.10%)
     
  • Bitcoin USD

    70,697.02
    +1,783.60 (+2.59%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,168.07
    -594.66 (-1.46%)
     

What You Must Know About Baozun Inc’s (NASDAQ:BZUN) Financial Health

Stocks with market capitalization between $2B and $10B, such as Baozun Inc (NASDAQ:BZUN) with a size of US$2.3b, do not attract as much attention from the investing community as do the small-caps and large-caps. While they are less talked about as an investment category, mid-cap risk-adjusted returns have generally been better than more commonly focused stocks that fall into the small- or large-cap categories. BZUN’s financial liquidity and debt position will be analysed in this article, to get an idea of whether the company can fund opportunities for strategic growth and maintain strength through economic downturns. Remember this is a very top-level look that focuses exclusively on financial health, so I recommend a deeper analysis into BZUN here.

Check out our latest analysis for Baozun

How does BZUN’s operating cash flow stack up against its debt?

Over the past year, BZUN has borrowed debt capital of around CN¥174m made up of current and long term debt. With this ramp up in debt, BZUN currently has CN¥726m remaining in cash and short-term investments , ready to deploy into the business. Moving onto cash from operations, its trivial cash flows from operations make the cash-to-debt ratio less useful to us, though these low levels of cash means that operational efficiency is worth a look. For this article’s sake, I won’t be looking at this today, but you can take a look at some of BZUN’s operating efficiency ratios such as ROA here.

Does BZUN’s liquid assets cover its short-term commitments?

At the current liabilities level of CN¥1.3b liabilities, it seems that the business has been able to meet these obligations given the level of current assets of CN¥2.7b, with a current ratio of 2.12x. Usually, for Online Retail companies, this is a suitable ratio since there’s a sufficient cash cushion without leaving too much capital idle or in low-earning investments.

NasdaqGS:BZUN Historical Debt October 19th 18
NasdaqGS:BZUN Historical Debt October 19th 18

Can BZUN service its debt comfortably?

With debt at 9.0% of equity, BZUN may be thought of as having low leverage. BZUN is not taking on too much debt commitment, which can be restrictive and risky for equity-holders.

Next Steps:

BZUN’s low debt is also met with low coverage. This indicates room for improvement as its cash flow covers less than a quarter of its borrowings, which means its operating efficiency could be better. However, the company will be able to pay all of its upcoming liabilities from its current short-term assets. Keep in mind I haven’t considered other factors such as how BZUN has been performing in the past. You should continue to research Baozun to get a better picture of the stock by looking at:

  1. 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.

  2. Valuation: What is BZUN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BZUN is currently mispriced by the market.

  3. 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.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Advertisement