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BJ's (BJ) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of BJs Wholesale Club Holdings (BJ - Free Report) ? Shares have been on the move with the stock up 14.2% over the past month. The stock hit a new 52-week high of $59.19 in the previous session. BJs Wholesale Club Holdings has gained 58.7% since the start of the year compared to the -2% move for the Zacks Consumer Discretionary sector and the -8.8% return for the Zacks Consumer Services - Miscellaneous industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 19, 2021, BJ's reported EPS of $0.82 versus consensus estimate of $0.65 while it beat the consensus revenue estimate by 8.35%.

For the current fiscal year, BJ's is expected to post earnings of $2.86 per share on $16.01 billion in revenues. This represents a -7.44% change in EPS on a 3.78% change in revenues. For the next fiscal year, the company is expected to earn $3.09 per share on $17.01 billion in revenues. This represents a year-over-year change of 7.77% and 6.23%, respectively.

Valuation Metrics

Though BJ's has recently hit a 52-week high, what is next for BJ's? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

BJ's has a Value Score of C. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 20.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 13.5X versus its peer group's average of 6.3X. Additionally, the stock has a PEG ratio of 2.53. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, BJ's currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if BJ's passes the test. Thus, it seems as though BJ's shares could have a bit more room to run in the near term.

How Does BJ's Stack Up to the Competition?

Shares of BJ's have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including RentACenter (RCII - Free Report) , Brunswick (BC - Free Report) , and SnapOn (SNA - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 39% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BJ's, even beyond its own solid fundamental situation.

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