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Baozun Inc (NASDAQ:BZUN), a internet company based in China, received a lot of attention from a substantial price increase on the NasdaqGS over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Baozun’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for Baozun
What’s the opportunity in Baozun?
According to my valuation model, the stock is currently overvalued by about 59%, trading at US$45.88 compared to my intrinsic value of $28.79. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Baozun’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Baozun generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Baozun’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in BZUN’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BZUN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on BZUN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for BZUN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.