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
-
Why Snowflake Stock Is Still a Buy After EarningsSnowflake stock is surging Thursday after cloud company beat expectations for its third quarter and raised its full-year outlook. Here's what you need to know.
-
Tariffs Could Make Your Holiday Shopping Pricier in 2025Tax Policy Trump’s tariffs would drive prices of clothes, toys, and furniture higher, according to a new study.
-
Why Snowflake Stock Is Still a Buy After Earnings
Snowflake stock is surging Thursday after cloud company beat expectations for its third quarter and raised its full-year outlook. Here's what you need to know.
-
To Future-Proof Retirement Security, We Need Better StrategiesWith retirees living longer and the inequalities that affect women and people of color, the retirement system needs some optimization. Here’s what would help.
-
Here's Why We All Win When Charitable Dollars Go to WomenGiving to charities for women and girls not only has a lasting impact on their lives — it also benefits society as a whole. Here’s how to start investing.
-
Stock Market Today: Stocks Close Mixed Amid War Angst, Nvidia AnxietyMarkets went into risk-off mode amid rising geopolitical tensions and high anxiety ahead of bellwether Nvidia's earnings report.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
Target Is the Worst S&P 500 Stock After Earnings. Here's WhyTarget stock is down big after the retailer missed expectations for its third quarter and slashed its full-year outlook. Here's what Wall Street is saying.
-
For a More Secure Retirement, Build in Some 'Safe Money'To solidify your retirement plan, write it down, reduce your market risk and allocate more safe money into your plan for income.
