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BJ's Wholesale Club (BJ) to Post Q3 Earnings: What's in Store?

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BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) is likely to register an increase in the bottom line when it reports third-quarter fiscal 2020 results on Nov 19, before the market opens. We note that the Zacks Consensus Estimate for earnings for the quarter under review has been stable at 63 cents over the past 30 days. The figure suggests a sharp improvement from 41 cents reported in the year-ago quarter.

Notably, this operator of membership warehouse clubs has a trailing four-quarter earnings surprise of 32%, on average. In the last reported quarter, this Westborough-based company surpassed the Zacks Consensus Estimate by a significant margin.

Further, the Zacks Consensus Estimate for revenues is pegged at $3,697 million, indicating growth of 14.5% from the prior-year reported figure.

Factors to Note

BJ's Wholesale Club’s top line might have benefited from coronavirus-led stockpiling and shift to food-at-home trend. The company’s focus on simplifying assortments, expanding into high-demand categories and building own-brands portfolio is commendable. It also remains committed toward enhancing omni-channel capabilities and providing value to customers. Cumulatively, these endeavors have been contributing to growth in membership signups and renewals, resulting in higher membership fee income and decent comparable club sales growth.

The coronavirus pandemic and the resultant stay-at-home trends have led to an increase in online shopping. Clearly, BJ's Wholesale Club has been sparing no effort to ramp up delivery services. The company has been directing resources toward expanding digital capabilities in order to better engage with members and provide them a convenient way to shop, including same-day delivery, curbside pick-up, and buy-online, pickup-in-club.

While the aforementioned factors raise optimism, we cannot ignore the impact of any deleverage in SG&A expense owing to the incremental costs related to the pandemic. This includes pay and benefits for associated members, safety and protective equipment costs, and other operational expenses.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for BJ's Wholesale Club this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

BJ's Wholesale Club has a Zacks Rank #2 and an Earnings ESP of +10.94%.

3 More Stocks With Favorable Combination

Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Dollar General (DG - Free Report) has an Earnings ESP of +16.53% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe's Companies (LOW - Free Report) has an Earnings ESP of +7.78% and a Zacks Rank #3.

Costco (COST - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #3.

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