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Bull of the Day: BJ's Wholesale Club (BJ)

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BJ’s Wholesale Club (BJ - Free Report) is a membership-only retail club chain that operates primarily on the East Coast, as well as in Ohio and Michigan. Similar to Costco, BJ’s offers members a variety of name-brand products at discount wholesale prices across many categories: grocery, household, pet, toys, and more.

Q3 Earnings Recap

Last November, BJ reported better-than-expected third quarter results, impressing Wall Street across the board.

Comparable store-sales grew to 19% for Q3, and while that is a slight slowdown from the prior quarter, it still stacks up favorably against rivals like Walmart’s (WMT - Free Report) Sam’s Club and Costco (COST - Free Report) .

Operating income rose to $190 million as management controlled selling expenses. This helped push adjusted EPS higher by 120% to $0.88 per share.

Revenue, excluding fuel sales, rose 19%, and online sales soared 200%.

Cash flow was also very strong, increased to over $800 million compared to $222 million in the year-ago quarter.

"The third quarter was another remarkable quarter with robust comp growth, significant market share gains, and record profitability," CEO Lee Delaney said in a press release.

Shares are Surging



Since last year’s lows, shares of BJ’s Wholesale have climbed over 57%. Estimates have been rising too, and BJ is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, 10 analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up from $2.64 per share to $3.01 per share. Earnings are expected see triple-digit growth for the current fiscal year, up 106%.

BJ’s doesn’t provide short-term outlooks, but its management team is anticipating elevated sales through this past holiday season and even after the Covid-19 pandemic disappears.

Looking ahead, growing market share will become a huge boon for the wholesale retailer. Last quarter’s record performance and cash flow growth will only help BJ’s improve its merchandising, e-commerce platform, and supply chain, ensuring that customers keep returning to its stores and website.

BJ’s is also expanding its footprint, opening more stores throughout Ohio and Michigan; it wouldn’t be surprising if the retailer ends up going national.

If you’re an investor searching for a retail stock to add to your portfolio, make sure to keep BJ on your shortlist.

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