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BJ

BJ's Wholesale Club Holdings NYSE:BJ Stock Report

Last Price

US$69.11

Market Cap

US$9.3b

7D

-2.6%

1Y

31.7%

Updated

15 Aug, 2022

Data

Company Financials +
BJ fundamental analysis
Snowflake Score
Valuation3/6
Future Growth2/6
Past Performance3/6
Financial Health3/6
Dividends0/6

BJ Stock Overview

BJ’s Wholesale Club Holdings, Inc., together with its subsidiaries, operates warehouse clubs on the east coast of the United States.

BJ's Wholesale Club Holdings Competitors

Price History & Performance

Summary of all time highs, changes and price drops for BJ's Wholesale Club Holdings
Historical stock prices
Current Share PriceUS$69.11
52 Week HighUS$74.09
52 Week LowUS$50.39
Beta0.46
1 Month Change-1.09%
3 Month Change8.31%
1 Year Change31.71%
3 Year Change218.92%
5 Year Changen/a
Change since IPO214.14%

Recent News & Updates

Jul 15

Costco Vs. BJ's Wholesale Stock: Which Is The Better Buy?

We highlight some of the main differences between these two stocks. We touch upon the outlook of the two stocks. We close with the technical and valuation picture. Costco Wholesale Corporation (COST), and BJ's Wholesale Club Holdings, Inc (BJ) are two US-based operators of warehouse clubs that offer their members a diverse range of merchandise goods at relatively low prices. Even though they operate in the same industry, there are plenty of differences between the two. How Are Costco And BJ's Wholesale Different? BJ's operations are strictly limited to the US markets (with a bias towards the east coast), where it operates 227 warehouse clubs and 159 gas stations. Its annual revenues are around the $16-$17bn mark, which would give it a market share of 7-8% of the $236bn valued US warehouse club market (Source: Warehouse Club Intelligence Center). COST is more geographically spread out (located in 46 American states, whereas BJ's is only located in 17), and whilst the US is still its largest market, accounting for 69% of the company's total warehouses, it also has operations in Canada, Mexico, Puerto Rico, Japan, China, UK, Korea, Taiwan, France, Australia, and Spain. Within the US market, it is the dominant entity, with a market share of around 60%. Costco's annual group revenues are also well over the $200bn mark, which gives you a sense of the size of the company. Both companies offer annual membership plans, and the texture and contribution of these plans to both companies' fortunes are relatively different. Costco's basic membership plans are priced at $60 a year, whilst its premium executive plan is priced at $120 a year; BJ's is a tad cheaper, with the base level plan coming in at $55 a year, and the premium plan priced at $110 a year. What also works in Costco's favor is that it has managed to tie up a larger proportion of its members with the premium plan. Currently, 43% of Costco's members are executive members, whereas, with BJ's, only 35% of its members have signed up for the premium Perk's program. Prima facie, with an approximate contribution of only 2% of group revenue (for both companies), one could be excused for playing down the membership fee component, but it would foolish to do so. Unlike the core retail operations where margins are remarkably low, these membership fees have no costs associated with them, and thus the flow-through to the operating profit level, and the net profit level can be quite pronounced, particularly with regards to BJ's Wholesale Club. According to data from the most recent quarter, these fees accounted for 64% of BJ's operating profit, and a whopping 86% of its net profit. With COST, the impact of fees on the bottom line is no doubt sizeable, but not as much as BJ's, which makes the operating model of the former, relatively more well-rounded. Earnings transcript, Quarterly Report Another key differentiating factor between these two companies is their SKU (Stock Keeping Unit) strategy, and this no doubt plays an important role in how effectively inventory is managed. Amongst all the warehouse club members in the US market, BJ's is believed to carry the most items- anything between 5500- 7000 SKUs, yet the diversity in categories is somewhat limited; COST is more efficient in this regard, carrying less than 4000 SKUs which appear to be rather well spread out. BJ's appears to have realized that their strategy isn't quite working out, and they've recently made a conscious decision to reduce the number of SKUs in certain terrains whilst expanding towards other categories. Nonetheless, over the years, COST has come across as a more competent entity in managing and clearing its inventory; currently, the days held in inventory ((DIO)) are closer to 28 days, whilst it is around 33 days for BJ. YCharts COST's capital position too is a lot more comforting; whilst it currently has around $9bn worth of debt (including capital leases), it also has a lot more cash (over $11.1bn), resulting in a net cash position of $2.8bn. Whilst BJ's should be commended for reducing its long-term debt over time from $2.5bn in FY18 to $0.7bn, its level of capital leases continues to trend up every year and is currently well over $2.1bn. The cash position too is rather minuscule at only $38m, resulting in a sizeable net debt (including capital leases) figure of over $3bn. Seeking Alpha COST's superior capital position also provides it with a comforting foundation to distribute dividends. Whilst the current yield may be a pittance at 0.66%, it is still better than nothing (BJ doesn't pay any dividends), and COST has been distributing dividends since 2004 (growing at a CAGR of 13%). What Is The Outlook For COST And BJ Stock? In the most recently concluded quarter, both companies posted solid net sales growth of 16% YoY, and one common theme was the appetite for gas gallons which also helped drive traffic to the stores. I'm not sure this will be a major driver going forward. Since peaking in mid-June at levels of $5.02, average gas prices per gallon have come off by 7% and look to be following a descending trajectory. This does not necessarily have to be a bad thing as a lower proportion of gas sales (where margins are razor thin) in the overall sales mix, could provide a fillip to both companies' gross margins. Inflation continues to be a major bugbear for both these firms and because they are value plays, it is not ideal for them to pass on these costs. BJ mentioned that cost inflation had been increasing on a sequential basis every month and both companies highlighted an approximate impact of 7% in the most recent quarter. I suspect we may see another quarter of mid-to-high single-digit inflation before things level off. All in all, expect pressures on the merchandise margin to persist in the upcoming quarter as well; just for some context, the merchandise margin (which does not include gas), was down by 30bps for BJ and 46bps for COST in the recently reported quarters. I'm not sure if BJ will follow suit, but COST also looks poised to hike its annual membership fees soon enough. Whilst there is no official confirmation of the same, and the management appears to be reluctant to pursue it in a high-inflationary environment, I believe we will see it come through before the end of the year. Previously they've raised it every 5.5 years, and Dec 2022 would coincide with that 5.5 mark so expect some updates before that. There's also a fairly resplendent buyback angle to consider for both stocks which could be instrumental in providing some support to the respective share prices. Costco's $4bn buyback program which commenced in April 2019, will be wrapped up in another eight months; as things stand, the company still has the authority to repurchase shares to the tune of$2.99b n. That figure represents around 1.3% of the current market cap. Nothing hugely exciting, but still somewhat useful. With the BJ stock, the buyback narrative is a lot more enticing but this will be spread out over a longer duration as their most recent $500m buyback program was only initiated in Nov 2021, and can be carried on till Jan 2025. As per the most recent data, BJ still had about$435m to spend, which represents close to 5% of the current market cap. Quarterly reports Taking a longer-term approach (over the next 2 years), it appears as though BJ will witness faster topline growth, but COST will experience better operating leverage and flow through. According to the YCharts estimates, over the next two fiscals, Costco's revenue could grow at a CAGR of 7.3%, whilst its bottom line will grow at a much superior pace of 11% (differential of 1.49x). With BJ, its bottom line growth is expected to lag the topline growth by 6bps (2-year Revenue CAGR of 8.61%, and EPS CAGR of 8.55%). YCharts Closing Thoughts - Is COST or BJ Stock A Better Buy? Prima facie, with inflation where it is and deteriorating consumer finances, I can see the merit in owning these value-conscious wholesale membership clubs. As you may have gleaned from what I've written so far, it also appears as though COST comes across as a more well-rounded option. However, at current levels, I wouldn't be too enthused about building fresh positions in either COST or BJ, given the technical and valuation backdrops of both these stocks. With the Costco stock, we can see that the momentum is currently with the bears as the stock had broken down from its ascending channel in May, and the small candles in the following months of June and July have reflected the lack of conviction amongst the bulls; if anything, this looks like a bearish pullback (so far). Investing In addition to that, if you compare COST to other staple stocks, as represented by the Vanguard Consumer Staples ETF (VDC), you can see that this ratio is trading above its mid-point (2.25) and doesn't offer great risk-reward.

Jul 14
Is BJ's Wholesale Club Holdings (NYSE:BJ) A Risky Investment?

Is BJ's Wholesale Club Holdings (NYSE:BJ) A Risky Investment?

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says...

Shareholder Returns

BJUS Consumer RetailingUS Market
7D-2.6%2.1%3.6%
1Y31.7%-0.9%-9.6%

Return vs Industry: BJ exceeded the US Consumer Retailing industry which returned -1% over the past year.

Return vs Market: BJ exceeded the US Market which returned -10.2% over the past year.

Price Volatility

Is BJ's price volatile compared to industry and market?
BJ volatility
BJ Average Weekly Movement7.3%
Consumer Retailing Industry Average Movement6.1%
Market Average Movement7.7%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: BJ is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: BJ's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
198434,000Bob Eddyhttps://www.bjs.com

BJ’s Wholesale Club Holdings, Inc., together with its subsidiaries, operates warehouse clubs on the east coast of the United States. It provides perishable, general merchandise, gasoline, and other ancillary services. The company sells its products through the websites BJs.com, BerkleyJensen.com, Wellsleyfarms.com, and Delivery.bjs.com as well as the mobile app.

BJ's Wholesale Club Holdings Fundamentals Summary

How do BJ's Wholesale Club Holdings's earnings and revenue compare to its market cap?
BJ fundamental statistics
Market CapUS$9.34b
Earnings (TTM)US$457.63m
Revenue (TTM)US$17.30b

20.4x

P/E Ratio

0.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
BJ income statement (TTM)
RevenueUS$17.30b
Cost of RevenueUS$14.15b
Gross ProfitUS$3.14b
Other ExpensesUS$2.68b
EarningsUS$457.63m

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

Aug 18, 2022

Earnings per share (EPS)3.39
Gross Margin18.17%
Net Profit Margin2.65%
Debt/Equity Ratio114.9%

How did BJ perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is BJ undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for BJ?

Other financial metrics that can be useful for relative valuation.

BJ key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.7x
Enterprise Value/EBITDA14.7x
PEG Ratio2.4x

Price to Earnings Ratio vs Peers

How does BJ's PE Ratio compare to its peers?

BJ PE Ratio vs Peers
The above table shows the PE ratio for BJ vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average28.5x
PSMT PriceSmart
20.3x11.2%US$2.0b
COST Costco Wholesale
42.8x9.6%US$238.0b
WMT Walmart
28x10.5%US$362.4b
CASY Casey's General Stores
23x5.9%US$7.8b
BJ BJ's Wholesale Club Holdings
20.4x8.4%US$9.3b

Price-To-Earnings vs Peers: BJ is good value based on its Price-To-Earnings Ratio (20.4x) compared to the peer average (28.5x).


Price to Earnings Ratio vs Industry

How does BJ's PE Ratio compare vs other companies in the US Consumer Retailing Industry?

Price-To-Earnings vs Industry: BJ is expensive based on its Price-To-Earnings Ratio (20.4x) compared to the US Consumer Retailing industry average (18.8x)


Price to Earnings Ratio vs Fair Ratio

What is BJ's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

BJ PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio20.4x
Fair PE Ratio17.9x

Price-To-Earnings vs Fair Ratio: BJ is expensive based on its Price-To-Earnings Ratio (20.4x) compared to the estimated Fair Price-To-Earnings Ratio (17.9x).


Share Price vs Fair Value

What is the Fair Price of BJ when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: BJ ($69.11) is trading below our estimate of fair value ($165.21)

Significantly Below Fair Value: BJ is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is BJ's Wholesale Club Holdings forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


8.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: BJ's forecast earnings growth (8.4% per year) is above the savings rate (1.9%).

Earnings vs Market: BJ's earnings (8.4% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: BJ's earnings are forecast to grow, but not significantly.

Revenue vs Market: BJ's revenue (5.9% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: BJ's revenue (5.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: BJ's Return on Equity is forecast to be very high in 3 years time (41.6%).


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Past Performance

How has BJ's Wholesale Club Holdings performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


38.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: BJ has high quality earnings.

Growing Profit Margin: BJ's current net profit margins (2.6%) are higher than last year (2.6%).


Past Earnings Growth Analysis

Earnings Trend: BJ's earnings have grown significantly by 38% per year over the past 5 years.

Accelerating Growth: BJ's earnings growth over the past year (12.4%) is below its 5-year average (38% per year).

Earnings vs Industry: BJ earnings growth over the past year (12.4%) underperformed the Consumer Retailing industry 16.4%.


Return on Equity

High ROE: Whilst BJ's Return on Equity (63.44%) is outstanding, this metric is skewed due to their high level of debt.


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Financial Health

How is BJ's Wholesale Club Holdings's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: BJ's short term assets ($1.8B) do not cover its short term liabilities ($2.2B).

Long Term Liabilities: BJ's short term assets ($1.8B) do not cover its long term liabilities ($3.1B).


Debt to Equity History and Analysis

Debt Level: BJ's net debt to equity ratio (109.7%) is considered high.

Reducing Debt: BJ had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: BJ's debt is well covered by operating cash flow (75.6%).

Interest Coverage: BJ's interest payments on its debt are well covered by EBIT (13.9x coverage).


Balance Sheet


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Dividend

What is BJ's Wholesale Club Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate BJ's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate BJ's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if BJ's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if BJ's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as BJ has not reported any payouts.


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Management

How experienced are the management team and are they aligned to shareholders interests?

1.7yrs

Average management tenure


CEO

Bob Eddy (49 yo)

1.33yrs

Tenure

US$16,340,546

Compensation

Mr. Robert W. Eddy, also known as Bob, serves as President, Chief Executive Officer and Director at BJ's Wholesale Club Holdings, Inc. since April 19, 2021. He served as Interim Chief Executive Officer at...


CEO Compensation Analysis

Compensation vs Market: Bob's total compensation ($USD16.34M) is above average for companies of similar size in the US market ($USD8.19M).

Compensation vs Earnings: Bob's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: BJ's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Members

Experienced Board: BJ's board of directors are considered experienced (3.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: BJ insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

BJ's Wholesale Club Holdings, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: BJ's Wholesale Club Holdings, Inc.
  • Ticker: BJ
  • Exchange: NYSE
  • Founded: 1984
  • Industry: Hypermarkets and Super Centers
  • Sector: Consumer Retailing
  • Implied Market Cap: US$9.342b
  • Shares outstanding: 135.18m
  • Website: https://www.bjs.com

Number of Employees


Location

  • BJ's Wholesale Club Holdings, Inc.
  • 25 Research Drive
  • Westborough
  • Massachusetts
  • 1581
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/15 00:00
End of Day Share Price2022/08/15 00:00
Earnings2022/04/30
Annual Earnings2022/01/29


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.