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BJ's (BJ) Down 3.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for BJ's Wholesale Club (BJ - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BJ's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BJ's Wholesale Club Q1 Earnings Beat, Sales Rise Y/Y
BJ’s Wholesale Club Holdings, Inc. reported first-quarter fiscal 2023 results, wherein the bottom line beat the Zacks Consensus Estimate and the top line missed the same. This operator of membership warehouse clubs registered robust growth in total comparable club sales.
Sturdy membership trends, assortment initiatives, enhanced digital capabilities and a robust real estate pipeline aided the company’s performance. Management remains optimistic about the company’s prospects.
Q1 Insights
BJ’s Wholesale Club reported adjusted earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate by a penny. The quarterly earnings declined 2.3% from 87 cents in the year-ago quarter.
The company generated total revenues of $4,723.1 million, which rose 5% from the year-ago quarter’s levels. However, the metric missed the consensus mark of $4,812 million. Net sales moved up 5% to $4,620.6 million, while membership fee income jumped 6.1% to $102.5 million.
Total comparable club sales during the quarter under discussion jumped 2% year over year. Excluding the impact of gasoline sales, comparable club sales rose 5.7%. We note that digitally-enabled sales rose 19% during the quarter.
A Look at Margins
In the first quarter, the gross profit rose to $880 million from $790.6 million reported in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, expanded 100 basis points (bps) from the year-ago quarter’s level owing to improved inventory management and moderated supply-chain cost.
Operating income increased 24.3% to $186.8 million, while the operating margin increased 70 bps to 4%. We note that adjusted EBITDA climbed 16.4% to $257 million during the quarter, while the adjusted EBITDA margin increased 53 bps to 5.4%.
Selling, general and administrative expenses rose 8.5% to $689.3 million from the year-ago quarter. This reflects higher labor and occupancy costs due to new club and gas station openings, as well as other investments incurred to drive strategic priorities. As a percentage of total revenues, SG&A expenses expanded 46 bps to 14.6%.
Other Details
Cash from operating activities and free cash flow were $119.1 million and $27 million, respectively, during the quarter. The long-term debt amounted to $448 million, while stockholders’ equity was $1,132 million in the first quarter of 2023.
As part of its share repurchase program, the company bought back 204,040 shares worth $15.3 million in the first quarter. BJ’s Wholesale Club opened two new clubs in the quarter and expects to open 11 new clubs in 2023.
On Feb 27, 2023, BJ's Wholesale Club launched its new credit card program with Capital One and Mastercard, officially known as the BJ's One Mastercard® program. The company believes that this program will provide first-class rewards and customer service experience, giving its members more value. The program will provide up to 5% in-club earnings and 2% out-of-club earnings as well as 15 cents off per gallon at BJ's Gas.
Outlook
Management reaffirmed its fiscal 2023 outlook. It envisions fiscal 2023 comparable club sales, excluding the impact of gasoline sales, to increase between 4% and 5% compared with 6.5% growth registered in fiscal 2022. BJ’s Wholesale Club expects membership fee income to increase in the band of 5% to 6% year over year.
It expects fiscal 2023 earnings per share to remain approximately flat year over year, including the 53rd-week benefit of low-teens cents per share. For the second quarter of 2023, management expects merchandise comps in the low single-digit range. Earnings per share are expected to be slightly higher than preceding quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.64% due to these changes.
VGM Scores
At this time, BJ's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BJ's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
BJ's belongs to the Zacks Consumer Services - Miscellaneous industry. Another stock from the same industry, H&R Block (HRB - Free Report) , has gained 12.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
H&R Block reported revenues of $2.09 billion in the last reported quarter, representing a year-over-year change of +1.6%. EPS of $4.20 for the same period compares with $4.11 a year ago.
H&R Block is expected to post earnings of $1.89 per share for the current quarter, representing a year-over-year change of +32.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for H&R Block. Also, the stock has a VGM Score of A.
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BJ's (BJ) Down 3.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for BJ's Wholesale Club (BJ - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BJ's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BJ's Wholesale Club Q1 Earnings Beat, Sales Rise Y/Y
BJ’s Wholesale Club Holdings, Inc. reported first-quarter fiscal 2023 results, wherein the bottom line beat the Zacks Consensus Estimate and the top line missed the same. This operator of membership warehouse clubs registered robust growth in total comparable club sales.
Sturdy membership trends, assortment initiatives, enhanced digital capabilities and a robust real estate pipeline aided the company’s performance. Management remains optimistic about the company’s prospects.
Q1 Insights
BJ’s Wholesale Club reported adjusted earnings of 85 cents per share, which surpassed the Zacks Consensus Estimate by a penny. The quarterly earnings declined 2.3% from 87 cents in the year-ago quarter.
The company generated total revenues of $4,723.1 million, which rose 5% from the year-ago quarter’s levels. However, the metric missed the consensus mark of $4,812 million. Net sales moved up 5% to $4,620.6 million, while membership fee income jumped 6.1% to $102.5 million.
Total comparable club sales during the quarter under discussion jumped 2% year over year. Excluding the impact of gasoline sales, comparable club sales rose 5.7%. We note that digitally-enabled sales rose 19% during the quarter.
A Look at Margins
In the first quarter, the gross profit rose to $880 million from $790.6 million reported in the year-ago period. The merchandise gross margin rate, which excludes gasoline sales and membership fee income, expanded 100 basis points (bps) from the year-ago quarter’s level owing to improved inventory management and moderated supply-chain cost.
Operating income increased 24.3% to $186.8 million, while the operating margin increased 70 bps to 4%. We note that adjusted EBITDA climbed 16.4% to $257 million during the quarter, while the adjusted EBITDA margin increased 53 bps to 5.4%.
Selling, general and administrative expenses rose 8.5% to $689.3 million from the year-ago quarter. This reflects higher labor and occupancy costs due to new club and gas station openings, as well as other investments incurred to drive strategic priorities. As a percentage of total revenues, SG&A expenses expanded 46 bps to 14.6%.
Other Details
Cash from operating activities and free cash flow were $119.1 million and $27 million, respectively, during the quarter. The long-term debt amounted to $448 million, while stockholders’ equity was $1,132 million in the first quarter of 2023.
As part of its share repurchase program, the company bought back 204,040 shares worth $15.3 million in the first quarter. BJ’s Wholesale Club opened two new clubs in the quarter and expects to open 11 new clubs in 2023.
On Feb 27, 2023, BJ's Wholesale Club launched its new credit card program with Capital One and Mastercard, officially known as the BJ's One Mastercard® program. The company believes that this program will provide first-class rewards and customer service experience, giving its members more value. The program will provide up to 5% in-club earnings and 2% out-of-club earnings as well as 15 cents off per gallon at BJ's Gas.
Outlook
Management reaffirmed its fiscal 2023 outlook. It envisions fiscal 2023 comparable club sales, excluding the impact of gasoline sales, to increase between 4% and 5% compared with 6.5% growth registered in fiscal 2022. BJ’s Wholesale Club expects membership fee income to increase in the band of 5% to 6% year over year.
It expects fiscal 2023 earnings per share to remain approximately flat year over year, including the 53rd-week benefit of low-teens cents per share. For the second quarter of 2023, management expects merchandise comps in the low single-digit range. Earnings per share are expected to be slightly higher than preceding quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.64% due to these changes.
VGM Scores
At this time, BJ's has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BJ's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
BJ's belongs to the Zacks Consumer Services - Miscellaneous industry. Another stock from the same industry, H&R Block (HRB - Free Report) , has gained 12.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
H&R Block reported revenues of $2.09 billion in the last reported quarter, representing a year-over-year change of +1.6%. EPS of $4.20 for the same period compares with $4.11 a year ago.
H&R Block is expected to post earnings of $1.89 per share for the current quarter, representing a year-over-year change of +32.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for H&R Block. Also, the stock has a VGM Score of A.