Shares in food supplements company Blackmores Limited (ASX: BKL) have sunk 25% since it announced its 2016 results on 24 August. However, the company reported a 114.5% increase in earnings-per-share (EPS) to $5.81, quite a feat for a $2 billion company, so does today’s share price provide a buying opportunity?

Independent director, John Armstrong, seems to think so given he bought $100,000 of stock for $125 per share on Monday.

It seems that the reason for the crash is that the company advised first quarter sales for 2017 will be lower than the prior corresponding period. Sales were $162 million in the first quarter of 2016, which was the lowest quarter for the year and so Blackmores faces an uphill battle to recover and surpass last year’s total sales in 2017.

But management said that the drop in revenue is due to softness in its volatile wholesale business with some “retailers destocking and some exporters changing the channels through which they acquire products.”

Therefore, the weak start to the year seems like a temporary blip rather than turning point especially given Blackmores has grown sales for the last 14 years.

In 2016, revenue rose by $245.6 million to $717 million with rising Chinese demand driving most of this increase. Sales to Chinese consumers, either directly or indirectly via Australian channels, increased an estimated four-fold to $250 million. Given the size of the market, I think that over time Chinese sales could dwarf the Australian business.

Blackmores is the number one brand for food supplements and vitamins in Australia, Thailand, Malaysia, Singapore and Hong Kong. It has been named the most trusted brand in Australia for eight years running and the company is doing plenty to maintain and extend its dominant position.

In 2016, it opened a flagship store in Bondi and stores in various international airports across South East Asia. It currently has 24 research projects underway including clinical trials and multiple partnerships with universities.

Blackmores’ brand is a source of sustainable competitive advantage and the company has delivered exceptional financial returns to date under the guidance of CEO of the year, Christine Holgate. In 2016 the company reported a staggering 39.9% return on assets and 56.1% return on equity.

Blackmores had $17.8 million of net debt at 30 June 2016 which is insignificant in the context of its $2.1 billion market capitalisation. The company is trading on a historical price-to-earnings ratio (PER) of 21 which looks undemanding given its recent earnings growth and the potential of its Chinese business.

It might also be worth taking a look at Bellamy’s Australia Ltd (ASX: BAL) and a2 Milk Company Ltd (Australia) (ASX: A2M) which are also taking advantage of recent free trade agreements with China.

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Motley Fool contributor Matt Brazier owns shares of Bellamy's Australia. The Motley Fool Australia owns shares of A2 Milk and 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.