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Category: Stock Market and BJ's Wholesale Club
Date: 22 November 2019 Stock Price: $23.84 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of BJ's Wholesale Club the discount grocery store retailer.
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About BJ's Wholesale Club
BJ’s Wholesale Club is a leading warehouse club operator on the East Coast of the United States. We deliver significant value to our members, consistently offering 25% or more savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors. We provide a curated assortment focused on perishable products, continuously refreshed general merchandise, gas and other ancillary services to deliver a differentiated shopping experience that is further enhanced by our omnichannel capabilities.
The image below shows BJ's value proposition flywheel is shown below
The image below shows BJ's value proposition flywheel is shown below
Overview of BJ's Wholesale Club's latest earnings report
The numbers we are interested in (for the quarter):
- Total revenue: $3.229 billion (up from $3.221 billion from the same quarter of the previous year)
- Revenues increased by 0.2% over the last 12 months
- Cost of Sales: $2.611 billion (down from $2.629 billion for the same quarter of the previous year)
- Cost of revenues decreased by -0.68% over the last 12 months
- Net income: $55.092 million (up from $54.431 million loss for the same quarter of the previous year)
- Diluted earnings per share: $0.40 (up from $0.39 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 138.192 million (down from 139.368 million for the same quarter of the previous year)
- Cash and cash equivalents: $29.9 million
- Cash and cash equivalents per share: $0.21
- Cash and cash equivalents makes up 0.9% of BJ's Wholesale Club's market capital
- Cash and cash equivalents makes up 0.55% of BJ's Wholesale Club's total assets
- Receivables: $185.953 million
- Receivables makes up 3.4% of BJ's Wholesale Club's total assets
- Inventories: $1.227 billion
- Inventories makes up 23% of BJ's Wholesale Club's total assets
- Cash generated from operations for 9 months: $221.522 million
- Cash generated from operations per share for 6 months: $1.60
BJ's Wholesale Club's management commentary on the results and earnings guidance
WESTBOROUGH, Mass.--(BUSINESS WIRE)-- BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen and thirty-nine weeks ended November 2, 2019.
- Net sales for the third quarter of fiscal 2019 increased 0.1% to $3.2 billion, compared to the third quarter of fiscal 2018.
- Comparable club sales excluding gasoline sales increased 1.1% for the third quarter of fiscal 2019, compared to the third quarter of fiscal 2018.
- Income from continuing operations of $55.2 million for the third quarter of fiscal 2019, compared to income from continuing operations of $54.6 million in the third quarter of fiscal 2018.
- Adjusted EBITDA for the third quarter of fiscal 2019 increased 3.8% to $154.1 million, compared to the third quarter of fiscal 2018.
- Net income was $55.1 million, or $0.40 per diluted share, and adjusted net income was $56.6 million, or $0.41 per diluted share, for the third quarter of fiscal 2019.
- Net cash provided by operating activities was $221.5 million for the first nine months of fiscal 2019. Free cash flow was $77.1 million for the first nine months of fiscal 2019.
- Company updates outlook for fiscal 2019.
“We delivered solid margin improvement and continued earnings growth in the third quarter ” said Christopher J. Baldwin, Chairman and Chief Executive Officer, BJ’s Wholesale Club. "We remain focused on executing against our strategic plan and transforming our business to be well positioned for the long-term. The board's decision to authorize a stock repurchase program reflects the strength of our cash flow and confidence in our growth strategy and long-term outlook."
The image below shows the fiscal guidance for BJ Wholesale Club for their full fiscal year 2019.
The image below shows the fiscal guidance for BJ Wholesale Club for their full fiscal year 2019.
BJ's Wholesale Club (NYSE:BJ) stock price history
The image below, obtained from Google shows the stock price history of BJ's Wholesale Club (NYSE: BJ) since its listing in June 2018. At its listing/IPO it was trading at around $22.00 a stock and its currently trading at $23.84 about 18 months later. That's a 8.4% return provided by BJ's Wholesale Club since its listing date. The stock is also trading at a lot closer to its 52 week low of $19.67 than it is to its 52 week high of $29.41 which to us is an indication that short term sentiment and momentum of BJ's Wholesale Club stock is still very positive.
Recent coverage BJ's Wholesale Club
The extract below touched on BJ's Wholesale the day it released its latest earnings results, as obtained from TheStreet.com
BJ's Wholesale Club (BJ - Get Report) posted moderately stronger-than-expected third quarter earnings Thursday, while tweaking its full-year profit guidance, despite softer same store sales gains. BJ's said earnings for the three months ending on November 2 came in at 41 cents per share, up 5.1% from the same period last year and a penny ahead of the Street consensus forecast. Group revenues, BJ's said, were largely flat to last year at $3.23 billion and came in just of analysts'- estimates of a $3.33 billion tally. Same store sales that don't include gasoline sales rose 1.5% from last year, BJ's said, compared to forecasts of a 2% gain.
Looking into the final months of its fiscal year, BJ's said it sees earnings in the range of $1.44 to $1.48 per share, a two cent improvement at the lower end, but a two cent trim at the higher end, and pegged 2019 sales at the lower end of its prior forecast of $12.9 billion. "We delivered solid margin improvement and continued earnings growth in the third quarter " said CEO Chris Baldwin. "We remain focused on executing against our strategic plan and transforming our business to be well positioned for the long-term. The board's decision to authorize a stock repurchase program reflects the strength of our cash flow and confidence in our growth strategy and long-term outlook."
Read the full article here
BJ's Wholesale Club (BJ - Get Report) posted moderately stronger-than-expected third quarter earnings Thursday, while tweaking its full-year profit guidance, despite softer same store sales gains. BJ's said earnings for the three months ending on November 2 came in at 41 cents per share, up 5.1% from the same period last year and a penny ahead of the Street consensus forecast. Group revenues, BJ's said, were largely flat to last year at $3.23 billion and came in just of analysts'- estimates of a $3.33 billion tally. Same store sales that don't include gasoline sales rose 1.5% from last year, BJ's said, compared to forecasts of a 2% gain.
Looking into the final months of its fiscal year, BJ's said it sees earnings in the range of $1.44 to $1.48 per share, a two cent improvement at the lower end, but a two cent trim at the higher end, and pegged 2019 sales at the lower end of its prior forecast of $12.9 billion. "We delivered solid margin improvement and continued earnings growth in the third quarter " said CEO Chris Baldwin. "We remain focused on executing against our strategic plan and transforming our business to be well positioned for the long-term. The board's decision to authorize a stock repurchase program reflects the strength of our cash flow and confidence in our growth strategy and long-term outlook."
Read the full article here
BJ's Wholesale Club (NYSE: BJ) latest stock valuation
So based on the earnings report of BJ's Wholesale Club (NYSE: BJ) and what do we value BJ's Wholesale Club (BJ) stock at? Based on the earnings reported and the fiscal guidance provided by the group our valuation model provides a target (full value) price for BJ's Wholesale Club at $25.60 a stock (down slightly from our 2nd quarter 2019 earnings report valuation of BJs).
We therefore believe the BJ's Wholesale Club is slightly undervalued.
We usually recommend long term fundamental or value investors buy into a stock at least 10% below our target (full value) price which in this case is $25.60. A good entry point into BJ's would therefore be at $23 or below.
We therefore believe the BJ's Wholesale Club is slightly undervalued.
We usually recommend long term fundamental or value investors buy into a stock at least 10% below our target (full value) price which in this case is $25.60. A good entry point into BJ's would therefore be at $23 or below.
Next earnings release of BJ's Wholesale Club
It is expected that BJ's Wholesale Club will release its 4th quarter and full fiscal 2019 earnings towards the end of February 2020