Shares of market darling Blackmores Limited (ASX: BKL) were on fire late last week, rising 3.1% on Thursday and another 5.7% on Friday. Shares of the vitamin and infant formula producer are currently fetching $161, up from a recent low of just $145.90.

The rebound has been driven by the company’s third quarter results, which were released to the market on Wednesday just after 1:00pm Sydney time. While you can read a full review of the results here, a quick glimpse shows that sales grew 63% during the nine months to 31 March 2016, with net profit after tax (NPAT) also rising 145% to $75.6 million.

Indeed, those growth figures are nothing short of outstanding, and go a long way towards justifying the company’s share price. According to Yahoo! Finance, the company is expected to generate $5.89 in earnings per share (EPS) this year (based on the forecasts of seven analysts), putting it on a forward price-earnings ratio of 27.3x. EPS is expected to rise to $7.26 in financial year 2017 (FY17), representing a current multiple of 22.2x projected earnings for that year.

While that seems like a reasonable price to pay for a business generating such strong growth, investors are clearly concerned about potential regulatory changes in the company’s biggest growth market, China.

Indeed, despite the gains over the last two days, the shares are still trading 21.4% below their $204.87 high from three weeks ago, with the concerns also acting as a drag on fellow infant formula providers such as Bellamy’s Australia Ltd (ASX: BAL) and a2 Milk Company Ltd (Australia) (ASX: A2M).

Some of these regulatory changes include a potential crackdown on grey-market transactions (whereby a customer purchases the product in Australia and then sells it to Chinese residents); a tax on goods purchased via foreign websites; as well as tougher regulations that will be imposed by China for companies selling infant formula in an effort to bolster food safety.

Blackmores’ CEO Christine Holgate was also quoted by The Australian Financial Review as saying more regulatory changes are expected, but that the company is well-placed for any of those changes. This is important for the business, considering it estimates that Asian shoppers now account for 50% of group revenue, although Blackmores’ underlying sales are still growing at 14% across the group even when the influence of Chinese consumers was excluded.

The company said: “It is a characteristic of all markets that regulations evolve. We believe Blackmores is well-placed to manage the constant evolution of the Chinese regulatory landscape with our omnichannel operating model for our China business and our ability to serve consumers through direct and indirect product supply, supported by a highly experienced local team.”

The bottom line on Blackmores

Blackmores is the envy of the Australian share market due to its growing sales, surging profits and long runway for future growth. Of course, that kind of mind-boggling growth cannot be sustained for too long, but the outlook is certainly bright for the business assuming it can overcome any confirmed or potential regulatory changes.

At the current price, Blackmores’ shares are not cheap but they don’t seem ridiculously expensive, either. As such, it is certainly worthy of further research by long-term investors and potentially worth a position in your portfolio.

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Motley Fool contributor Ryan Newman owns shares of Bellamy's Australia. 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.