Critical Survey: Baozun (NASDAQ:BZUN) and Dollarama (OTCMKTS:DLMAF)

Dollarama (OTCMKTS:DLMAF) and Baozun (NASDAQ:BZUN) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Dollarama and Baozun’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dollarama	17.32%	96.41%	17.21%
Baozun	-1.26%	2.55%	1.43%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Dollarama and Baozun, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dollarama	0	4	4	5	3.08
Baozun	1	1	2	0	2.25

Baozun has a consensus price target of $3.80, suggesting a potential upside of 7.65%. Given Baozun’s higher probable upside, analysts clearly believe Baozun is more favorable than Dollarama.

Insider and Institutional Ownership

47.3% of Baozun shares are owned by institutional investors. 59.2% of Baozun shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Dollarama and Baozun”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dollarama	$5.21 billion	8.05	$940.70 million	$3.60	43.48
Baozun	$1.42 billion	0.14	-$34.62 million	($0.33)	-10.70

Dollarama has higher revenue and earnings than Baozun. Baozun is trading at a lower price-to-earnings ratio than Dollarama, indicating that it is currently the more affordable of the two stocks.

Summary

Dollarama beats Baozun on 11 of the 14 factors compared between the two stocks.

About Dollarama

Dollarama Inc. operates a chain of dollar stores in Canada. Its stores offer general merchandise, consumables, and seasonal products. It also sells its products through online store. The company was formerly known as Dollarama Capital Corporation and changed its name to Dollarama Inc. in September 2009. Dollarama Inc. was founded in 1992 and is headquartered in Mount Royal, Canada.

About Baozun

Baozun Inc., through its subsidiaries, provides end-to-end e-commerce solutions to brand partners in the People’s Republic of China. The company operates through two segments, E-Commerce and Brand Management (BBM). The E-Commerce segment offers brands’ store operations, customer services and value-added services in logistics and supply chain management, IT, and digital marketing. The Brand Management segment provides brand management, strategic and tactic positioning, branding and marketing, retail and e-commerce operations, supply chain, and logistics and technology services. It serves brand partners in various categories, including apparel and accessories, appliances, electronics, home and furnishings, food and health products, beauty and cosmetics, fast moving consumer goods, mother and baby products, and automobiles. The company was formerly known as Baozun Cayman Inc. and changed its name to Baozun Inc. in March 2015. Baozun Inc. was founded in 2007 and is headquartered in Shanghai, the People’s Republic of China.