BJ's Wholesale Club Holdings (BJ) stock is climbing the price charts Thursday after the warehouse club announced its first membership fee increase in seven years and unveiled a new $1 billion stock buyback authorization. This is offsetting the company's mixed third-quarter earnings results.
Starting with earnings. In the 13 weeks ended November 2, BJ's revenue increased 3.5% year over year to $5.1 billion, driven by a 3.8% increase in comparable-club sales when excluding fuel. Its earnings per share (EPS) rose 18% from the year-ago period to $1.18.
"Our third-quarter results demonstrate the combination of great value and strong execution," said BJ's CEO Bob Eddy in a statement. "We delivered robust membership growth and hit a milestone of 7.5 million members."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The company's results were mixed compared with analysts' expectations. Wall Street was anticipating slightly higher revenue of $5.12 billion and much lower earnings of 93 cents per share, according to MarketWatch.
For its fourth quarter, BJ's said it expects comparable-club sales to rise 2.5% to 3%, excluding fuel, and EPS in the range of 78 cents to 88 cents.
As a result of its strong performance in the first nine months of its fiscal year and given its outlook on the fourth quarter, BJ's updated its full-year forecast. The company now anticipates comparable-club sales growth in the range of 2.3% to 2.4%, excluding fuel, and earnings per share of $3.90 to $4.00. It had previously guided for comparable-club sales growth in the range of 1% to 2% and earnings of $3.75 to $4.00.
BJ's raises membership prices, unveils big stock buyback program
BJ's also announced its first membership fee increase in seven years. Its Club membership fee will increase to $60 from $55 and its Club+ membership fee will rise to $120 from $110, effective January 1, 2025.
"Since the last membership fee increase, the company has transformed its business with a relentless focus on delivering value to members," management said in a statement. "Today's announcement allows the company to invest in an even stronger value proposition for its 7.5 million member base, which continues to grow."
Lastly, BJ's announced a new $1 billion share repurchase authorization. Stock buybacks can help boost the share price, especially when it accounts for a healthy 8% of market cap as BJ's plan does.
Is BJ stock a buy, sell or hold?
BJ's Wholesale has outperformed the broader market in 2024, up 38% for the year to date vs the S&P 500's 24% gain. And Wall Street is bullish on the consumer staples stock. According to S&P Global Market Intelligence, the consensus recommendation among 25 covering analysts it tracks is a Buy.
However, Wall Street's price targets have struggled to keep up with BJ's surging share price. Indeed, the average analyst price target of $89.01 represents a slight discount to its current price. Price-target increases could come in the days and weeks ahead following the strong earnings report.
Financial services firm BofA Securities is one of the more bullish outfits on BJ stock with a Buy rating and $100 price target.
"We rate BJ shares at Buy as we view BJ's as well positioned in both the near term and long term given its strong value proposition (especially in fuel) in a highly inflationary environment, as well as strong and improving membership trends," wrote BofA Securities analyst Robert Ohmes said in a November 11 note.
Related Content
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
What Wall Street's CEOs Are Saying About Trump's TariffsWe're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
-
To Stay on Track for Retirement, Consider Doing ThisWriting down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your RetirementHigher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
When to Sell Your StockKnowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
