Does the Recent Dip Create Opportunity in BJ's Wholesale Club Stock for 2025?

If you have ever wondered whether BJ's Wholesale Club Holdings deserves a spot in your portfolio, you are not alone. Plenty of investors are weighing their options when it comes to this membership-based retailer, and for good reason. After reaching some notable highs, BJ's share price has given back a bit, down 3.0% in the past week and 7.7% over the past 30 days. But if you take a step back, the bigger picture is hard to ignore. Shares are still up 3.2% year-to-date, over 6% in the past year, and more than doubled in the last five years, up a striking 125.8%.

There has been a broader uptick in interest for discount and membership retailers as inflation-conscious consumers continue to seek savings in bulk purchases. BJ's has capitalized on this trend, expanding its footprint and catering to changing shopping habits. However, the stock’s recent pullback might have more to do with shifting risk sentiment across retail stocks as investors weigh recession concerns and changing consumer behaviors.

So, is now a smart time to buy into BJ's, or is the run-up overdone? According to our standard valuation checks, BJ’s scores a 1 out of 6 for value. This suggests it is considered undervalued by only one of six key measures. But those numbers only tell part of the story. Next, let’s break down how each of the main valuation approaches stacks up for BJ’s, and later on, dig deeper into the evidence for an even smarter take on valuation analysis.

BJ's Wholesale Club Holdings scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: BJ's Wholesale Club Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to the present, reflecting both expected performance and the time value of money. This helps investors determine whether a stock is trading above or below its actual worth based on fundamentals, not just market sentiment.

For BJ's Wholesale Club Holdings, analysts report that its most recent Free Cash Flow stands at $396.4 Million. Over the coming years, cash flow projections remain modest, with analyst consensus expecting $278 Million in 2026, $241.2 Million in 2027, and a jump to $354.7 Million by 2028. Looking further into the future, beyond what analysts provide, additional estimates extrapolated by Simply Wall St see Free Cash Flow nearing $381.4 Million in 2035. These figures are useful indicators but may carry higher uncertainty the further out you go.

According to this cash flow analysis, the estimated intrinsic value for BJ's is $54.62 per share. Compared to its current share price, this implies the stock is about 66.6% overvalued based on projected cash generation.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BJ's Wholesale Club Holdings.

Our Discounted Cash Flow (DCF) analysis suggests BJ's Wholesale Club Holdings may be overvalued by 66.6%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: BJ's Wholesale Club Holdings Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to valuation tool for profitable companies, as it allows investors to compare how much they are paying for a dollar of earnings today relative to other stocks. This makes it a helpful yardstick for companies like BJ’s Wholesale Club Holdings, which consistently generate profits.

It's important to remember that what counts as a “normal” PE ratio is not fixed. Growth expectations and company-specific risks influence where this multiple should settle. Higher growth companies usually justify a higher PE, while higher-risk names trade at a discount due to the additional uncertainty.

Currently, BJ’s trades on a PE ratio of 20.7x. That puts it almost exactly in line with the broader Consumer Retailing industry average of 20.9x, but a bit ahead of its direct peer group’s average of 17.8x. At first glance, that might make BJ’s look slightly expensive compared to some peers, but there is more to consider.

Simply Wall St’s proprietary “Fair Ratio” is calculated to reflect the unique factors shaping a company’s valuation, including growth outlook, profitability, industry landscape, company size, and risks. Unlike a simple comparison to industry averages, this fair value metric provides a customized benchmark for BJ’s, which lands at 19.1x.

Comparing BJ’s current PE ratio of 20.7x to its Fair Ratio of 19.1x reveals that the company is trading at a small premium to what would be considered fair value given its specific characteristics. While not egregiously stretched, it does suggest that shares are modestly overvalued on this basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BJ's Wholesale Club Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, a smarter, more dynamic way to make investment decisions. A Narrative goes beyond numbers, allowing you to define the story or perspective you have on a company by integrating your assumptions about its future revenues, earnings, and profit margins. This directly connects that storyline to a fair value estimate.

Narratives link a company’s business outlook to a financial forecast, making it easy to see how your personal view translates into a buy or sell decision. On Simply Wall St’s Community page, millions of investors can quickly create or browse Narratives that automatically compare fair value to the latest share price. These forecasts even update in real time as new information, such as news or earnings results, becomes available.

For example, some investors may believe BJ’s membership expansion and digital growth will drive robust future earnings, targeting a fair value as high as $130 per share. Others, focusing more on risks and industry headwinds, see fair value closer to $70 per share. With Narratives, you can test which perspective sits closest to your own and take action with confidence, backed by both a story and the numbers.

Do you think there's more to the story for BJ's Wholesale Club Holdings? Create your own Narrative to let the Community know!

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.

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