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Bull of the Day: BJ's Wholesale Club (BJ)

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Madeleine Johnson
·3 min read
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BJ’s Wholesale Club (BJ) is a membership-only retail club chain that operates primarily on the East Coast, as well as in Ohio and Michigan. Similar to Costco, BJ’s offers members a variety of name-brand products at discount wholesale prices across many categories: grocery, household, pet, toys, and more.

Q3 Earnings Recap

Last November, BJ reported better-than-expected third quarter results, impressing Wall Street across the board.

Comparable store-sales grew to 19% for Q3, and while that is a slight slowdown from the prior quarter, it still stacks up favorably against rivals like Walmart’s (WMT) Sam’s Club and Costco (COST).

Operating income rose to $190 million as management controlled selling expenses. This helped push adjusted EPS higher by 120% to $0.88 per share.

Revenue, excluding fuel sales, rose 19%, and online sales soared 200%.

Cash flow was also very strong, increased to over $800 million compared to $222 million in the year-ago quarter.

"The third quarter was another remarkable quarter with robust comp growth, significant market share gains, and record profitability," CEO Lee Delaney said in a press release.

Shares are Surging

 

BJs Wholesale Club Holdings, Inc. Price and Consensus
BJs Wholesale Club Holdings, Inc. Price and Consensus

 

Since last year’s lows, shares of BJ’s Wholesale have climbed over 57%. Estimates have been rising too, and BJ is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, 10 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $2.64 per share to $3.01 per share. Earnings are expected see triple-digit growth for the current fiscal year, up 106%.

BJ’s doesn’t provide short-term outlooks, but its management team is anticipating elevated sales through this past holiday season and even after the Covid-19 pandemic disappears.

Looking ahead, growing market share will become a huge boon for the wholesale retailer. Last quarter’s record performance and cash flow growth will only help BJ’s improve its merchandising, e-commerce platform, and supply chain, ensuring that customers keep returning to its stores and website.

BJ’s is also expanding its footprint, opening more stores throughout Ohio and Michigan; it wouldn’t be surprising if the retailer ends up going national.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep BJ on your shortlist.

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Walmart Inc. (WMT) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
BJs Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
 
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