There's no shortage of deal seekers in China, especially when we're talking about markdowns on brand-name apparel. Vipshop Holdings (NYSE:VIPS) posted another quarter of heady growth after Monday's market close, and while it wasn't enough to wow all the Wall Street pros -- there was one analyst downgrade on Tuesday -- the stock did manage to open higher on Tuesday following the solid financials.

Net revenue for the online discounter's first quarter rose 31% to the U.S. equivalent of $2.32 billion. There were 26 million active customers during the period, up 32% since the prior-year period. They placed 72.1 million orders during the first three months of the year. More than 55.5 million people placed an order through Vipshop over the past year, an improvement of 38%.

Vipshop's homepage.

Image source: Vipshop.

Into the VIP lounge

The bottom line didn't grow as quickly as the top line, but Vipshop's adjusted earnings still rose by a better-than-expected 28% for the quarter. Vipshop's adjusted profit of $0.19 a share was just ahead of the $0.18 a share that analysts were modeling. This is old hat for the dot-com darling, as it routinely exceeds Wall Street profit targets.

QuarterEarnings Per ShareEstimateBeat
Q2 2016 $0.16 $0.14 14%
Q3 2016 $0.15 $0.14 7%
Q4 2016 $0.23 $0.21 10%
Q1 2017 $0.19 $0.18 6%

Data source: Yahoo! Finance.

Companies that continuously trounce expectations tend to move higher, and that's been Vipshop. The stocks has moved higher every single month this year -- up 34% year to date through Monday's close -- a fitting surge for a company that turned heads when it doubled for three consecutive years between 2012 and 2014. 

Vipshop is making the most of its popularity. It's fleshing out its own delivery network within China, now armed with 23,000 last-mile delivery specialists. Vipshop's last-mile staff also help pick up returns, shaving its shipping costs dramatically.

Wall Street couldn't agree if Vipshop did enough to keep this year's winning streak going. JPMorgan upgraded the stock from neutral to overweight, but Nomura Instinet took the stock from buy to neural. They're passing ships here, and only one will be right.

Vipshop initiated top-line guidance for the current quarter, targeting 26% to 30% growth. The outlook would suggest decelerating growth, but it's hard to take the company's historically conservative guidance as gospel. It was also eyeing 26% to 30% growth for the first quarter, and we now know that played out to be a 31% spike. It forecasted 30% to 33% growth the quarter before that, only to check in with 37% revenue growth.

Whether Vipshop is setting the bar low on purpose or its fundamentals are in a perpetual state of improvement, one of the hottest stocks from 2012 to 2014 may be getting started on a new hot streak. 


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.