BJ's Wholesale Club Holdings, Inc. (NYSE:BJ) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 14% higher than the analysts had forecast, at US$3.8b, while EPS were US$0.69 beating analyst models by 97%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from BJ's Wholesale Club Holdings' 15 analysts is for revenues of US$14.5b in 2021, which would reflect a reasonable 4.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 22% to US$2.22. Before this earnings report, the analysts had been forecasting revenues of US$13.8b and earnings per share (EPS) of US$1.71 in 2021. So it seems there's been a definite increase in optimism about BJ's Wholesale Club Holdings' future following the latest results, with a considerable lift to the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 26% to US$39.25 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values BJ's Wholesale Club Holdings at US$45.00 per share, while the most bearish prices it at US$33.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that BJ's Wholesale Club Holdings' revenue growth is expected to slow, with forecast 4.5% increase next year well below the historical 5.8% growth over the last year. Compare this to the 47 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 3.9% per year. Factoring in the forecast slowdown in growth, it looks like BJ's Wholesale Club Holdings is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around BJ's Wholesale Club Holdings' earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on BJ's Wholesale Club Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for BJ's Wholesale Club Holdings going out to 2025, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for BJ's Wholesale Club Holdings that we have uncovered.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.