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Category: Stock Market and BJ's Wholesale Club
Date: 22 November 2019 Stock Price: $35.25 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. The group's revenue surged as people stocked up their pantries due to stay at home orders and lockdowns across the United States.
Our top priority remains the health and safety of our members and team members during this challenging time and I am deeply thankful for the contributions of our dedicated team members this past quarter said Lee Delaney, President and Chief Executive Officer" |
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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.
Overview of BJ's Wholesale Club's 1st quarter 2020 earnings report
The numbers we are interested in (for the quarter):
- Total revenue: $3.797 billion (up from $3.143 billion from the same quarter of the previous year)
- Revenues increased by 20.8% over the last 12 months
- Cost of Sales: $3.060 billion (down from $2.568 billion for the same quarter of the previous year)
- Cost of revenues increased by 19.1% over the last 12 months
- Some margin gain for BJ's wholesale as the surge in revenues outpaced the growth in their cost of sales.
- Net income: $55.092 million (up from $54.431 million loss for the same quarter of the previous year)
- Diluted earnings per share: $0.69 (up from $0.25 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 138.428 million (down from 140.463 million for the same quarter of the previous year)
- Cash and cash equivalents: $132.915 million
- Cash and cash equivalents per share: $0.96
- Cash and cash equivalents makes up 0.9% of BJ's Wholesale Club's market capital
- Cash and cash equivalents makes up 2.49% of BJ's Wholesale Club's total assets
- Receivables: $193.884 million
- Receivables makes up 3.6% of BJ's Wholesale Club's total assets
- Inventories: $1.024 billion
- Inventories makes up 19.2% of BJ's Wholesale Club's total assets
- Cash generated from operations for 3 months: $469.902 million
- Cash generated from operations per share for 3 months: $3.39
BJ's Wholesale Club's management commentary on their 1st quarter 2020 earnings
WESTBOROUGH, Mass.--(BUSINESS WIRE)-- BJ’s Wholesale Club Holdings, Inc. (NYSE: BJ) (the "Company") today announced its financial results for the thirteen weeks ended May 2, 2020.
“Our top priority remains the health and safety of our members and team members during this challenging time and I am deeply thankful for the contributions of our dedicated team members this past quarter,” said Lee Delaney, President and Chief Executive Officer, BJ’s Wholesale Club. "While the coronavirus pandemic increased demand for our services, our team's hard work and the capabilities we have built over the last four years have enabled us to thrive and deliver very strong merchandise comparable sales. Furthermore, we drove earnings and cash flow growth and invested in our team members and our business. These efforts will allow us to continue to build on this momentum and position ourselves for success over the long-term."
Response to COVID-19: In response to the coronavirus pandemic, BJ's implemented a number of operational changes to support team members, members and communities we serve.
Team Member Support
“Our top priority remains the health and safety of our members and team members during this challenging time and I am deeply thankful for the contributions of our dedicated team members this past quarter,” said Lee Delaney, President and Chief Executive Officer, BJ’s Wholesale Club. "While the coronavirus pandemic increased demand for our services, our team's hard work and the capabilities we have built over the last four years have enabled us to thrive and deliver very strong merchandise comparable sales. Furthermore, we drove earnings and cash flow growth and invested in our team members and our business. These efforts will allow us to continue to build on this momentum and position ourselves for success over the long-term."
Response to COVID-19: In response to the coronavirus pandemic, BJ's implemented a number of operational changes to support team members, members and communities we serve.
Team Member Support
- Increased all hourly team members wages by an additional $2 per hour.
- Distributed special bonuses for managers and key personnel, incremental to the annual incentive program.
- Issued an emergency paid leave policy to support team members. The emergency paid leave policy includes:
- Waived absenteeism policy.
- Pay for up to fourteen days when under mandated quarantine.
- Pay through a mix of accrued sick time and company paid time if a team member tests positive for coronavirus and needs to self-quarantine.
- Ensured Aisle Help, the Company’s employee relief fund, is available to team members facing financial hardship.
- Implemented operational processes to encourage social distancing in clubs, including instructional signage.
- Provided personal protective equipment to all team members.
- Implemented enhanced cleaning and sanitization procedures at clubs, distribution centers and the home office.
- Installed mobile and fixed sneeze-guard barriers at the membership desk, in checkout lanes and at exits.
- Implemented remote working for home office team members.
- Closed all BJ’s clubs on Easter Sunday, April 12, 2020 to offer team members a day to rest and recharge.
Member Support:
Community Support:
- Prioritized safety and followed recommendations from the Centers for Disease Control and Prevention (CDC) to ensure clubs exceed the company’s already high standards for general hygiene and health practices.
- Focused on getting high-demand products to its clubs as quickly as possible and offering members alternative shopping methods like Buy Online, Pick Up in-Club and Same-Day Delivery.
- Reduced club hours to give team members more time to restock, sanitize and recharge.
- Limited the number of members allowed to shop inside clubs to no more than 20% of total capacity, at any given time.
- Temporarily closed all BJ's Optical centers and cellular services.
Community Support:
- Increased workforce by actively adding permanent and temporary positions in clubs throughout the Eastern United States.
- Announced dedicated shopping hours for members age 60 and over to shop in a less crowded environment.
- Implemented "Appreciation Hour" for first responders and healthcare workers, so they can shop during a designated hour on Sundays without a membership.
- Contributed $1 million from the BJ’s Charitable Foundation to support hospitals throughout our footprint and local and national organizations providing essential services and support to those in need during these challenging times.
- Donated countless items to first responders, healthcare workers and nonprofits to help support communities.
- Continued to donate perishable food on a weekly basis to local food banks across our footprint through the Feeding Communities program.
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 $35.25 about 2 years later. That's a 46.5% return provided by BJ's Wholesale Club since its listing date. The stock is also trading at a lot closer to its 52 week high of $35.45 than it is to its 52 week low of $18.84which to us is an indication that short term sentiment and momentum of BJ's Wholesale Club stock is very positive right now
BJ's Wholesale (NYSE: BJ) stock price history since its listing
Recent Google searches for BJ stock price
The graphic below shows the trend in Google searches for BJ stock price over the last 12 months in the United States as obtained from Google Trends. As it shows interest in BJ stock price has been fairly limited but has increased in recent months.
BJ's Wholesale Club (NYSE: BJ) stock vs Costco Wholesale Corp (NASDAQ: COST) stock
The image below shows the stock price performance of BJ's Wholesale (BJ) and Costco Wholesale (Cost) since the listing of BJ's wholesale in middle of 2018. As the image shows the trends and levels of the stocks performance has been very different over the period in question, and for the most part Costco outperformed that of BJ's wholesale, however the almost 10% surge in the stock of BJ's wholesale on the 21 May 2020 has pushed the returns provided by BJ's over the period looked at past that of Costco.
BJ's Wholesale Club (NYSE: BJ) stock vs Costco Wholesale Corp (NASDAQ: COST) stock
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 FFool.com
Shares of BJ's Wholesale Club (NYSE:BJ) were surging higher in early trading on Thursday, after the company reported record first-quarter earnings for 2020. As of 11:00 a.m. EDT today, the stock was trading 13% higher and still climbing.
Among the numbers dazzling investors is BJ's astounding comparable-store sales growth of 20%, as the COVID-19 pandemic motivated shoppers to pack their pantries
So what
BJ's also sells gas, and the price per gallon has fallen, hurting the company's sales. Excluding gas sales, comps grew 27%. Overall, quarterly revenue was up 21% year over year to $3.8 billion. Strong sales drove operating leverage, leading to a massive increase in profits. Net income came in at $96 million, up 167%. And earnings per share were $0.69, an increase of 176% from last year. Wall Street isn't used to those kind of numbers from a consumer-staple retailer like BJ's Wholesale Club. While investors surely expected a strong report, this surpassed expectations, which explains today's stock gains.
Read the full article here
Shares of BJ's Wholesale Club (NYSE:BJ) were surging higher in early trading on Thursday, after the company reported record first-quarter earnings for 2020. As of 11:00 a.m. EDT today, the stock was trading 13% higher and still climbing.
Among the numbers dazzling investors is BJ's astounding comparable-store sales growth of 20%, as the COVID-19 pandemic motivated shoppers to pack their pantries
So what
BJ's also sells gas, and the price per gallon has fallen, hurting the company's sales. Excluding gas sales, comps grew 27%. Overall, quarterly revenue was up 21% year over year to $3.8 billion. Strong sales drove operating leverage, leading to a massive increase in profits. Net income came in at $96 million, up 167%. And earnings per share were $0.69, an increase of 176% from last year. Wall Street isn't used to those kind of numbers from a consumer-staple retailer like BJ's Wholesale Club. While investors surely expected a strong report, this surpassed expectations, which explains today's stock gains.
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 $32.50 a stock (up significantly from our 3rd quarter 2019 earnings report valuation of BJs).
We therefore believe the stock of BJ's Wholesale Club is slightly overvalued.
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 $32.50. A good entry point into BJ's would therefore be at $29.30 or below. We expect the stock of BJ's to pull back after its strong run to levels closer to our target price in coming weeks and months.
We therefore believe the stock of BJ's Wholesale Club is slightly overvalued.
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 $32.50. A good entry point into BJ's would therefore be at $29.30 or below. We expect the stock of BJ's to pull back after its strong run to levels closer to our target price in coming weeks and months.
Next earnings release of BJ's Wholesale Club
It is expected that BJ's Wholesale Club will release its 2nd quarter 2020 earnings towards the end of August 2020