American membership-only warehouse club chain BJ’s Wholesale Club Holdings, Inc. (BJ) delivered solid second-quarter results aided by consistent and robust performance across all categories and geographies. Shares popped 4% on the news, closing at $54.02 on August 19.
Adjusted earnings for the quarter stood at $0.82 per share, up 6.5% year-over-year and significantly higher than the Street’s estimate of $0.63 per share. (See BJ’s Wholesale Club stock charts on TipRanks)
Additionally, quarterly net sales grew 5.6% to $4.09 billion compared to the year-ago period and surpassed analysts’ estimates of $3.74 billion.
What’s more, total comparable club sales increased 4% compared to the prior-year period. The robust quarterly performance was driven by outstanding membership results, expanding market share, and elevated consumer spending trends.
Commenting on the Fiscal 2021 outlook, the company’s Executive Vice President and CFO Laura Felice said, “Looking ahead, we remain confident our business will continue to thrive and that our solid membership trends, assortment initiatives, enhanced digital capabilities and robust real estate pipeline will drive sustained and strong profitable growth.”
Having said that, management abstains from giving any formal guidance for the future owing to the COVID-19 related uncertainty.
Recently, Wells Fargo analyst Edward Kelly reiterated a Buy rating on the stock and lifted the price target to $58 (7.4% upside potential) from $52.
Kelly noted that BJ is on a path to recovery with several developing factors, making the stock an attractive investment idea in 2021. Additionally, the analyst foresees the pandemic as a “springboard to higher earnings and an improved growth algorithm” for the company.
Kelly added, “While concerns about sluggish comps and general skepticism historically held us back, growing confidence in a better long-term narrative, a clear turnaround opportunity, and defensive positioning have aligned to raise our optimism.”
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 5 Buys and 4 Holds. The average BJ’s Wholesale Club price target of $54 implies that the stock is fairly valued at current levels. Shares have gained 21.5% over the past year.
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