Despite facing market oversupply and strong competition Bega Cheese Ltd (ASX: BGA) reported a 7.5% increase in sales to $1.2 billion and a whopping 132% increase in full year profit after tax to $28.8 million.

Pleasingly the company is now cash flow positive once again. The company reported statutory net cash inflow from operating activities of $59 million in FY 2016, compared to net cash outflow of $17.3 million in FY 2015.

This strong performance hasn’t gone unnoticed by the market. Its shares are 2% higher in afternoon trade, bringing its 30-day return to over 12%. But is it too late to invest in this growing dairy company?

Bega Cheese delivered full year earnings per share of 18.9 cents, compared to 8.1 cents in FY 2015. This is undoubtedly a strong result, but it does mean its shares are now changing hands at around 34x full year earnings. Personally I feel this makes its shares look a little expensive and I would be hesitant to make an investment at the current price.

The global dairy markets are expected to continue to see price depression in the short term, whilst supply outstrips demand. For this reason I’m slightly concerned as to whether Bega Cheese can produce the growth required to justify paying such a premium for its shares.

There is of course the potential for a strong increase in demand from the Asian region. The company does have a growing presence in the region, but whether or not it can replicate the success of both Blackmores Limited (ASX: BKL) and Bellamy’s Australia Ltd (ASX: BAL) is something only time will tell.

For now I would keep Bega Cheese on the watch list and wait for better entry points at a cheaper price.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.