In case they weren’t uncomfortable enough already, shareholders of Bellamy’s Australia Ltd (ASX: BAL) may be feeling some anxiety watching their shares fall another 5.7% today.

Bellamy’s, the producer of organic infant formula and baby products, was one of the best-performing shares from the entire ASX during 2015, but that trend has not continued this year. The shares have now fallen 38% since hitting a high of $16.50 late last year to trade at $10.23, with some investors fearing they could have even further to fall.

It seems unlikely that the problem could relate to the quality of the business itself, nor the results that it has achieved over the last year. Its sales and earnings have both grown at astronomical rates thanks mostly to China’s insatiable demand for quality foods and infant formula from Western nations, with signs of further growth to come.

Of course, there is a risk that China could clamp down on so-called “grey market” sales, which are those that occur when an individual in Australia purchases an item locally and then sells it online to Chinese residents, making a handsome profit in doing so. That could impact sales in the near-term, although Bellamy’s is also trying to ramp up its direct sales to the nation to benefit from the high margins itself.

This threat has likely contributed to Bellamy’s falling share price, and is a likely reason behind the similar declines from Blackmores Limited (ASX: BKL) and a2 Milk Company Ltd (Australia) (ASX: A2M) since late last year as well.

It’s likely that Bellamy’s valuation has also been a contributing factor to its declines so far this year. Despite their decline since late last year, Bellamy’s shares are still trading on a price-earnings ratio of roughly 104x last year’s earnings, although that metric is set to decline considerably during the 2016 financial year.

Assuming full-year revenue of $250 million (the mid-point of the guidance recently given by management) and similar margins as those achieved in the first-half of the current financial year, net profit after tax (NPAT) could be around $32.5 million, or roughly 257% above NPAT from FY15. That would have the shares trading on a forward price-earnings ratio of roughly 30.4x forecast earnings.

Now, even that is quite expensive compared to the average S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) company, but not so ridiculous that investors should be rushing for the exits. After all, Belllamy’s is recording incredible growth right now, and there is plenty of room left to expand even further over the coming years.

Sometimes, investors have to pay up for higher quality businesses. That’s not to say investors should rush into buying Bellamy’s shares, either, but they are certainly worth the consideration of longer-term investors – particularly if they do fall any further.

(For the sake of full disclosure, I sold some of my shares late last year, but still own some based on the expectation of further growth).

Foolish takeaway

Bellamy’s early gains have already been recognised, so investors shouldn’t expect their shares to double or triple anytime soon. Given its valution, investors should also expect some volatility in the stock’s price, but long-term investors could still be rewarded for their patience.

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Motley Fool contributor Ryan Newman owns shares of Bellamy's Australia. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.