Yahoo Finance Is BJ's Wholesale Club (BJ) a Smart Bet Ahead of Q1 Earnings?
As BJ's Wholesale Club Holdings, Inc. BJ gears up to unveil its first-quarter fiscal 2024 results on May 23 before market open, investors are contemplating whether now is the opportune moment to buy into this membership-only warehouse club chain. With robust growth in membership, digital sales and private label brands, BJ’s Wholesale Club presents an intriguing investment opportunity.
The company appears poised for a positive performance in terms of revenues, with the Zacks Consensus Estimate projecting revenues to reach $4,862 million, marking a 2.9% increase from the year-ago period. However, there are expectations of a slight decline in the bottom line compared to the prior year. The Zacks Consensus Estimate for first-quarter earnings per share has remained stable at 84 cents over the past 30 days, which indicates a marginal decrease of 1.2% from the corresponding quarter of the previous year.
Despite this anticipated drop in earnings, BJ's Wholesale Club demonstrates resilience and significant growth potential within a competitive market landscape. The company's commitment to providing a diverse range of high-quality products resonates strongly with consumers, fostering robust customer loyalty and repeat business.
Seizing the Opportunity
BJ's Wholesale Club recognizes the importance of adaptability and innovation, critical for success in the dynamic retail landscape. The company's proactive approach to embracing change and leveraging technological advancements has positioned it favorably amid industry disruptions. By prioritizing initiatives aimed at enhancing the member experience and streamlining operations, BJ's Wholesale Club has solidified its competitive stance.
The company's commitment to bolstering marketing and merchandising capabilities, coupled with its expansion into high-demand categories and the growth of its own-brand portfolio, has yielded remarkable results. This has played a pivotal role in driving membership signups and renewals, resulting in a notable surge in membership fee income.
In the fourth quarter of fiscal 2023, membership fee income witnessed a year-over-year increase of 6.5%, fueled by strong renewal rates and successful membership acquisition. A sustained improvement in membership fee income is anticipated as new club openings ramp up. For the current and next fiscal, we foresee membership fee income to increase at a rate of approximately 6.3% and 6%.
BJ's Wholesale Club's focus on expanding digital capabilities is another key aspect of its growth trajectory. The company offers members convenient ways to shop, including same-day delivery, curbside pick-up, and buy online, pick up in-club. With a robust digital portfolio encompassing Bjs.com, BerkleyJensen.com, Wellsleyfarms.com and the BJ’s mobile app, the company is ensuring an engaging and seamless digital shopping experience.
Management believes that digitally engaged members have higher average baskets and make more trips per year than members who shop in-club only. Digitally enabled comparable sales rose 28% in the fourth quarter, with clubs fulfilling approximately 90% of digitally enabled sales.
The company aims for mid-single-digit revenue growth and high-single to low-double-digit earnings per share increases. Its long-term target also indicates low-to-mid single-digit comparable sales growth, excluding gasoline sales. With its strategic initiatives and growth targets, BJ's Wholesale Club presents an enticing opportunity for investors looking for potential long-term growth.
Shares of BJ's Wholesale Club have risen 22.7% in the past six months compared with the industry’s growth of 14%.
BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise
BJ's Wholesale Club Holdings, Inc. price-consensus-eps-surprise-chart | BJ's Wholesale Club Holdings, Inc. Quote
Unlocking Value
While BJ's Wholesale Club currently trades at a premium compared to industry peers, this elevated valuation is not without merit. With a forward 12-month price-to-earnings ratio of 20.11, surpassing the median level of 16.89 observed in the past year, BJ's Wholesale Club demonstrates its appeal to investors seeking growth opportunities.
Moreover, when compared to the industry's forward 12-month P/E ratio of 12.97, BJ's Wholesale Club’s higher valuation reflects its position as a standout performer in the market. The company's promising prospects and market potential support its premium valuation. Additionally, the stock currently has a Value Score of B, further validating its appeal.
The growth trajectory for BJ's Wholesale Club appears promising, with the Zacks Consensus Estimate for sales for the current and next fiscal year standing at $20.54 billion and $21.81 billion, respectively. These figures indicate year-over-year growth of 3.4% and 6.2%.
What the Zacks Model Unveils
As investors prepare for BJ's Wholesale Club's first-quarter earnings, question looms regarding earnings beat or miss. Our proven model does not conclusively predict an earnings beat for BJ's Wholesale this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.
BJ's Wholesale has a Zacks Rank #3 but an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Despite the predicted earnings miss, there are underlying factors suggesting BJ's Wholesale Club remains a compelling investment opportunity.
Stocks With the Favorable Combination
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Target TGT currently has an Earnings ESP of +6.39% and carries a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at $2.05, flat year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target’s top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $24.5 billion, which indicates a drop of 3.2% from the figure reported in the prior-year quarter. TGT has a trailing four-quarter earnings surprise of 27.1%, on average.
Dollar General DG currently has an Earnings ESP of +0.24% and a Zacks Rank of 3. The company is likely to register a decrease in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.57 suggests a sharp decline from the year-ago reported number of $2.34.
Dollar General’s top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $9.85 billion, which suggests a decline of 5.4% from the prior-year quarter. Dollar General reported back-to-back positive earnings surprises in the last two reported quarters.
American Eagle Outfitters AEO currently has an Earnings ESP of +6.84% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 27 cents suggests a jump of 58.8% from the year-ago quarter.
American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 5.9% from the figure reported in the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.
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Target Corporation (TGT) : Free Stock Analysis Report
Dollar General Corporation (DG) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
