U.S. markets closed
  • S&P Futures

    4,306.50
    -1.25 (-0.03%)
     
  • Dow Futures

    34,120.00
    +2.00 (+0.01%)
     
  • Nasdaq Futures

    13,642.00
    -16.25 (-0.12%)
     
  • Russell 2000 Futures

    2,023.80
    +0.50 (+0.02%)
     
  • Crude Oil

    87.05
    +0.52 (+0.60%)
     
  • Gold

    1,790.70
    +1.00 (+0.06%)
     
  • Silver

    20.07
    -0.01 (-0.07%)
     
  • EUR/USD

    1.0179
    +0.0008 (+0.08%)
     
  • 10-Yr Bond

    2.8240
    +0.0330 (+1.18%)
     
  • Vix

    19.69
    -0.26 (-1.30%)
     
  • GBP/USD

    1.2103
    +0.0008 (+0.07%)
     
  • USD/JPY

    134.1650
    -0.0500 (-0.04%)
     
  • BTC-USD

    23,999.97
    -57.93 (-0.24%)
     
  • CMC Crypto 200

    571.80
    -0.12 (-0.02%)
     
  • FTSE 100

    7,536.06
    +26.91 (+0.36%)
     
  • Nikkei 225

    29,101.33
    +232.42 (+0.81%)
     

Here's Why BJ's Wholesale Club Holdings (NYSE:BJ) Has Caught The Eye Of Investors

  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like BJ's Wholesale Club Holdings (NYSE:BJ). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

Check out our latest analysis for BJ's Wholesale Club Holdings

How Quickly Is BJ's Wholesale Club Holdings Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Recognition must be given to the that BJ's Wholesale Club Holdings has grown EPS by 43% per year, over the last three years. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for BJ's Wholesale Club Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 12% to US$17b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

earnings-and-revenue-history
earnings-and-revenue-history

Of course the knack is to find stocks that have their best days in the future, not in the past. You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for BJ's Wholesale Club Holdings.

Are BJ's Wholesale Club Holdings Insiders Aligned With All Shareholders?

Since BJ's Wholesale Club Holdings has a market capitalisation of US$9.1b, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. Holding US$87m worth of stock in the company is no laughing matter and insiders will be committed in delivering the best outcomes for shareholders. This should keep them focused on creating long term value for shareholders.

Should You Add BJ's Wholesale Club Holdings To Your Watchlist?

BJ's Wholesale Club Holdings' earnings per share growth have been climbing higher at an appreciable rate. That sort of growth is nothing short of eye-catching, and the large investment held by insiders should certainly brighten the view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So based on this quick analysis, we do think it's worth considering BJ's Wholesale Club Holdings for a spot on your watchlist. It is worth noting though that we have found 1 warning sign for BJ's Wholesale Club Holdings that you need to take into consideration.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here