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
-
The Surprising Truth About Loneliness and LongevityWe've all heard about the epidemic of loneliness that can shorten lives and make retirement miserable. But there's more to the story.
-
The Dollar Index Is Sliding. Is Your Portfolio Prepared?The Dollar Index Is Sliding. Is Your Portfolio Prepared? The dollar's fall has been troubling because inflation appears to be constrained and the economy has been strong. Here's what it means for investors.
-
The Dollar Index Is Sliding. Is Your Portfolio Prepared?
The Dollar Index Is Sliding. Is Your Portfolio Prepared? The dollar's fall has been troubling because inflation appears to be constrained and the economy has been strong. Here's what it means for investors.
-
Seven Financial Considerations When Downsizing for RetirementWith prices going up on everything, you may be looking for a cheaper place to live. To truly evaluate costs, take a hard look at taxes and intangibles.
-
I Have Plenty of Money: Why Do I Need a Long-Term Care Plan?Long-term care planning, whether through insurance or self-funding, is crucial not only for financial protection but also to preserve family relationships and reduce the emotional and logistical burdens on loved ones.
-
The GENIUS, CLARITY, and Anti-CBDC Acts: What Bitcoin Investors Need to KnowMovement on the crypto front at the federal level has the potential to usher in substantial change. Here's what it means for your portfolio.
-
Wellness Stocks to Invest in NowBreakthroughs that help us live longer, healthier lives can also create opportunities for investors.
-
Three Steps for Evaluating a Downsize in Retirement: A Financial Planner's GuideUnless you think things through, you could end up with major (and costly) regrets. To make the right choice, base it on the three keys to retirement happiness.
-
Worried About Your Retirement Income? Four Questions to Ask Yourself, From a Financial PlannerIf you're nearing or in retirement and stressing about your retirement income (so many of us are), consider taking some time to think about these four issues.
-
Stock Market Today: Stocks Step Back From New HighsInvestors, traders and speculators continue the low-volume summer grind against now-familiar uncertainties.
