BJ’s Wholesale Club Pulls Back to Trend: It’s Time for an Entry

Key Points

• BJ's Wholesale Club pulls back following the Q2 release to align the market with long-term trends: it's time to make an entry.
• There are headwinds in 2025, but this company is building leverage for when consumer trends shift.
• Analysts are bullish on this stock and see it advancing by double-digits from critical support levels. 

BJ’s Wholesale Club’s NYSE: BJ price action in late August is not bullish, but it is good news for investors. The company’s tepid (in relation to analysts' consensus) results left the market wanting more but align with a robust long-term outlook.

While consumer headwinds impact the business today, they accelerate store count growth and deepen market penetration, setting itself up for long-term growth that will be amplified when headwinds ease. 

The critical takeaway is that this retail company is growing, building value for investors, and is trading at deep-value levels, setting up a trend-following entry.

BJ’s price action has been trending higher since 2020, when it began to gain traction in the COVID-19 pandemic. The market has repeatedly confirmed its trend, and is trading near the critical level as calendar Q3 2025 draws to a close.

That level is near the uptrend line and is unlikely to be broken due to the analysts’ sentiment trends. The FQ2 release and guidance update led to several price target reductions, but the net result is bullish. The data tracked by MarketBeat reveals that coverage increased over the preceding three quarters, the consensus sentiment increased from Hold to Moderate Buy, and the revisions align with the consensus price target. It forecasts a 20% upside from the critical level and is likely to be a low estimate. 

BJ’s Wholesale Reaffirms Guidance: Leans Into Growth Strategy

BJ’s Wholesale had a decent quarter, with revenue growing by 3.3% to fall slightly short of larger competitor Walmart NYSE: WMT. The bad news is that revenue fell somewhat short of the consensus, but offsetting factors exist. The decline in gas prices is one, impacting comps by more than 200 basis points. Comps grew by 2.3% ex-fuel, underpinned by a 9% increase in fees and store traffic. 

Digital, one of the company’s growth pillars, increased by 34% and contributed significantly to the strength in the margin. 

The margin news is good. The company widened its gross and operating margin despite increased SG&A costs, which are expected to normalize over time. SG&A costs increased due to several factors, including accelerated store openings, a revenue and earnings driver over the long term.

The result is that operating income increased by 6.3%, net income by 3.9%, and adjusted EPS by 4.6%, outpacing the top-line growth by more than 100 basis points and the consensus figure by 450 bps. 

The guidance is also good, forecasting the Q2 strengths to continue through the year’s end. The highlights are that revenue growth targets were reaffirmed, while the adjusted EPS was increased. The increase is six cents at the midpoint, aligning the forecast with the consensus figure, and it may be cautious due to the trends.

Consumers have become price-conscious and seek value, quality, and longevity with their product choices. 

BJ’s Builds Value for Its Investors

BJ’s Wholesale provides value for its investors and shoppers.

At the end of Q2, the balance sheet highlights included increased cash, current, and total assets, steady liabilities, and increasing equity. 

Leverage remains low, with long-term debt of less than 0.2x the equity and solid cash flow.

The cash flow and low leverage also allow for significant share repurchases.

The Q2 buyback reduced the count by about 1% on average for the quarter, and this pace will likely continue due to the remaining authorization and cash flow outlook.

The buyback includes up to $950 million in shares, equivalent to about 23 more quarters.