BJ's Wholesale Pops on Membership Fee Hike, Stock Buybacks
BJ's stock is rallying Thursday after the warehouse club raised its membership fee for the first time in seven years and unveiled a big stock buyback program.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
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."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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 Cost of Leaving Your Money in a Low-Rate AccountWhy parking your cash in low-yield accounts could be costing you, and smarter alternatives that preserve liquidity while boosting returns.
-
I want to sell our beach house to retire now, but my wife wants to keep it.I want to sell the $610K vacation home and retire now, but my wife envisions a beach retirement in 8 years. We asked financial advisers to weigh in.
-
How to Add a Pet Trust to Your Estate PlanAdding a pet trust to your estate plan can ensure your pets are properly looked after when you're no longer able to care for them. This is how to go about it.
-
How to Add a Pet Trust to Your Estate Plan: Don't Leave Your Best Friend to Chance
Adding a pet trust to your estate plan can ensure your pets are properly looked after when you're no longer able to care for them. This is how to go about it.
-
Want to Avoid Leaving Chaos in Your Wake? Don't Leave Behind an Outdated Estate PlanAn outdated or incomplete estate plan could cause confusion for those handling your affairs at a difficult time. This guide highlights what to update and when.
-
I'm a Financial Adviser: This Is Why I Became an Advocate for Fee-Only Financial AdviceCan financial advisers who earn commissions on product sales give clients the best advice? For one professional, changing track was the clear choice.
-
Nasdaq Slides 1.4% on Big Tech Questions: Stock Market TodayPalantir Technologies proves at least one publicly traded company can spend a lot of money on AI and make a lot of money on AI.
-
I Met With 100-Plus Advisers to Develop This Road Map for Adopting AIFor financial advisers eager to embrace AI but unsure where to start, this road map will help you integrate the right tools and safeguards into your work.
-
The Referral Revolution: How to Grow Your Business With TrustYou can attract ideal clients by focusing on value and leveraging your current relationships to create a referral-based practice.
-
This Is How You Can Land a Job You'll Love"Work How You Are Wired" leads job seekers on a journey of self-discovery that could help them snag the job of their dreams.
-
Fed Vibes Lift Stocks, Dow Up 515 Points: Stock Market TodayIncoming economic data, including the January jobs report, has been delayed again by another federal government shutdown.
