What happened
Baozun (BZUN 0.42%) stock is seeing sustained rebound momentum this week. Prior to market open on Friday, the company's share price was up 11.7% from the previous week's market close, according to data from S&P Global Market Intelligence.
After intense sell-offs early in 2022, and the beginning of March in particular, Chinese tech stocks have recently been regaining ground. Baozun stock also appears to have benefited from news that the company has repurchased senior notes and will be buying back more of its stock.
Image source: Getty Images.
So what
Baozun published a press release on Tuesday announcing that it had repurchased roughly $166.3 million in 1.625% convertible senior notes that were due in 2024. The move should have the effect of reducing the company's interest expenses.
Baozun also announced a major new share repurchasing initiative this week. The e-commerce company published a press release today announcing that it plans to repurchase an additional $80 million worth of shares. The move brings its total repurchase authorization to $86.8 million, and the initiative likely suggests that management believes the company is significantly undervalued.
Now what
Baozun stock continues to look quite cheap by many traditional valuation metrics. The company currently has a market capitalization of roughly $565 million and is valued at just 34% of this year's expected sales and roughly 10 times expected earnings.
In addition to creating a near-term floor on the company's stock price, the move to buy back and retire stock will have the effect of increasing earnings per share by reducing the number of total shares outstanding. However, relatively strong sales and earnings performance over the last few years hasn't translated into gains for the stock. Geopolitical risk factors, including the possibility that Chinese stocks will be delisted from U.S. exchanges, create potential threats that could cause Baozun to see volatile trading despite what might otherwise look like very attractive valuation levels.
