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Russia accused of 'kidnapping' head of Ukraine nuclear plant
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Danish Energy Agency says Nord Stream 2 gas pipeline under Baltic Sea appears to have stopped leaking gas
UK train strikes and energy hikes add to a week of turmoil
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Russia blindfolds, detains Ukraine nuclear plant chief
NIH to fund unproven ALS drugs under patient-backed law
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Want to Increase Your Conversion Rates? This Is the Biggest Threat to Your Success.
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Russia accused of 'kidnapping' head of Ukraine nuclear plant
EU chief: New Greece-Bulgaria gas pipeline 'means freedom'
The Safest Option in Trades! (Ad)pixel
Danish Energy Agency says Nord Stream 2 gas pipeline under Baltic Sea appears to have stopped leaking gas
UK train strikes and energy hikes add to a week of turmoil
The Safest Option in Trades! (Ad)pixel
Russia blindfolds, detains Ukraine nuclear plant chief
NIH to fund unproven ALS drugs under patient-backed law
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Want to Increase Your Conversion Rates? This Is the Biggest Threat to Your Success.
The Safest Option in Trades! (Ad)pixel
Russia accused of 'kidnapping' head of Ukraine nuclear plant
EU chief: New Greece-Bulgaria gas pipeline 'means freedom'
The Safest Option in Trades! (Ad)pixel
Danish Energy Agency says Nord Stream 2 gas pipeline under Baltic Sea appears to have stopped leaking gas
UK train strikes and energy hikes add to a week of turmoil
The Safest Option in Trades! (Ad)pixel
Russia blindfolds, detains Ukraine nuclear plant chief
NIH to fund unproven ALS drugs under patient-backed law

BJ’s Wholesale Club Pops, Will Costco Be Next?

BJ’s Wholesale Club Pops, Will Costco Be Next?

BJ’s (NYSE: BJ) Wholesale Club Q2 results echo the strength seen in Sam’s Club segment at Walmart (NYSE: WMT). The two membership clubs posted record results driven by rising member counts that are underpinning a robust outlook for the year. Assuming these trends are true across the discount/membership club universe Costco (NYSE: COST) should put in a very solid quarter as well. The caveat is that Costco won’t report until next month so the news could be priced into the market before then. For now, shares of BJ’s are rocketing higher on the news and breaking out to new highs. 

Within the realm of wholesale clubs, BJs is the fastest growing growth story and a value compared to its peers. The stock is trading at only 20X it earnings compared to 24X for Walmart and 42X for Costco. It is a given that both Costco and Walmart are better-established and much larger companies, and both pay a dividend although Costco is far below the market average, BJ’s Wholesale Club is reinvesting in growth and delivering in ways neither of its larger competitors can match. While Walmart was able to improve its guidance the new outlook is only in-line with the consensus while BJs outperformed and raised to a level well above the consensus. 


BJ’s Wholesale Club, Growing Growing Growing

BJ’s Wholesale Club had a fantastic quarter producing a record $5.1 billion in net revenue. The revenue is up 22% over last year driven by a 19.8% comp that compares to a much lower 9.5% comp at Sams’s Club. The revenue also beat the Marketbeat.com consensus figure by $0.470 billion or 1000 basis points which beat out the tepid 170 bps of outperformance put in by Walmart as a whole. On an x-gasoline basis, comps are up a slighter 7.6% but still outperforming Sam’s Club by a wide margin and margins are holding up as well. In regard to membership, BJ’s membership revenue increased by 11.3% which trailed Sam’s Club by less than 100 bps but should reaccelerate with the opening of new stores later in the year. 

Moving on to the margin and earnings, the company was able to improve its operating margin on a YOY basis and grow earnings faster than revenue. The operating income increased by 23.9% and net income from continuing operating is up 27% compared to the 22% increase in revenue and margins are expected to widen in the back half of the year. On the bottom line, the GAAP of $1.03 is up 28% versus last year while the adjusted $1.06 is up $.26 from last year and beat by $0.25 and the guidance is just as rosy. 

BJ’s Wholesale Club raised its guidance for the full year because of the 2nd quarter strength and the outlook includes ongoing improvement in the back half of the year. The revenue range was upped to 4% to 5% versus the 1% to 3% first put forth and margins are expected to widen. The company is now expecting adjusted EPS in the range of $3.50 to $3.60 versus the consensus of $3.25 which should spark a round of positive chatter if not price target increases and upgrades from the analysts. 

The Technical Outlook: BJ’s Breaks Out 

BJ’s shares popped about 10% at the open following the Q2 release and broke out to a new high. Assuming the bulls follow through on this move the break-out is a very bullish indication of higher prices. The near-term outlook has the stock moving up to the $85 to $90 range with the possibility of even higher prices down the road. If the market can not maintain these levels, however, BJ’s will likely remain range bound in the $60 to $75 region. 

BJ’s Wholesale Club Pops, Will Costco Be Next?

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
BJ's Wholesale Club (BJ)
2.2443 of 5 stars
$72.81-2.2%N/A20.51Moderate Buy$78.07
Walmart (WMT)
2.9076 of 5 stars
$129.70-1.9%1.73%25.89Moderate Buy$151.41
Costa Group (CGC)
0 of 5 stars
A$0.00-100.0%N/AN/AN/A
Costco Wholesale (COST)
2.7254 of 5 stars
$472.27-1.4%0.76%35.94Moderate Buy$570.32
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in BJ's Wholesale Club right now?

Before you consider BJ's Wholesale Club, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and BJ's Wholesale Club wasn't on the list.

While BJ's Wholesale Club currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.
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