In the last 12 months the Blackmores Limited (ASX: BKL) share price has tumbled 39%, leaving it perilously close to its 52-week low.
Whilst its shares have been trending lower for much of the last 12 months, they took a sizeable dip recently following the release of a weaker-than-expected first-half result.
As was widely expected, a weak first quarter impacted the health supplements company's half-year results. Half-year sales fell 6% to $322 million and net profit dropped 42% to $28 million.
Pleasingly though Blackmores' second quarter was far stronger than its first, giving investors hope that business is returning to normal at last. Second quarter sales increased 16% and profit jumped 33% on its first quarter.
Is it a bargain buy?
At 30x annualised earnings it is hard to call Blackmores a bargain, but I do see a lot of value in its shares for patient buy and hold investors. Especially with its significant growth potential in international markets.
One huge bright spot from its disappointing first-half was its sales growth in the China market. Clearly it wasn't just a2 Milk Company Ltd (Australia) (ASX: A2M) having success in the lucrative market at the end of last year.
Sales in China rose a whopping 92% to $64 million. If the China business continues on its current growth trajectory it won't be long until it becomes the company's biggest market.
Another bright spot was its BioCeuticals business. This segment delivered sales of $51 million in the first half, up 54% on the prior corresponding period.
What now?
Although its full-year result will inevitably be lower than in FY 2016, I remain confident that the company will once again return to growth in FY 2018.
There will no doubt be many ups and downs in the next 12 months, but I think investors willing to be patient will be rewarded handsomely in the long-term.
