BJ's Wholesale (BJ) Stock Gains on Q3 Earnings Beat, Ups View

BJ's Wholesale Club Holdings, Inc. BJ delivered third-quarter fiscal 2018 results, wherein both top and bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. In fact, this marked the company’s second consecutive quarter of top and bottom-line beat. Further, the solid quarter has encouraged management to raise its view for fiscal 2018, which seems to have perked up investors’ sentiment. Markedly, shares of the company have increased more than 7% in the after-market trading session on Nov 20.

This operator of membership warehouse clubs reported adjusted earnings of 39 cents a share that beat the Zacks Consensus Estimate of 34 cents and increased significantly from 25 cents reported in the year-ago period. This Westborough, MA-based company generated total revenues of $3,221.7 million that surpassed the consensus mark of $3,168 million and grew 4.5% year over year.

Notably, net sales increased 4.3% to $3,150.2 million while membership fee income advanced 10.1% to $71.4 million.

BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise

 

BJ's Wholesale Club Holdings, Inc. Price, Consensus and EPS Surprise | BJ's Wholesale Club Holdings, Inc. Quote

Comparable sales rose 3.6% during the quarter under review. Excluding the impact of gasoline sales, merchandise comparable sales increased 1.9%, marking the fifth straight quarter of growth.

Gross profit was $592.1 million, up 5.6% from the year-ago period while gross margin expanded 20 basis points to 18.4%. Excluding the impact of gas sales, merchandise gross margin grew roughly 60 bps on the back of the company’s procurement efforts.

Operating income increased 12.2% to $90.3 million while operating margin expanded 20 basis points to 2.8%. Adjusted EBITDA increased 5.3% to $148.6 million while adjusted EBITDA margin remained flat at 4.6%.

SG&A expenses increased 499.6 million, up 4% from the year-ago period.

Other Financial Details

BJ's Wholesale currently carries a Zacks Rank #3 (Hold). It ended the quarter with cash and cash equivalents of $31.5 million, long-term debt of $1,549.4 million, and stockholders' deficit of $256.6 million. Management projects capital expenditure for fiscal 2018 of $160-$170 million.

FY18 Outlook

Management now forecasts fiscal 2018 net sales of $12.65-$12.75 billion compared with previously mentioned $12.6-$12.7 billion. Merchandise comparable store sales (excluding gasoline) are expected to rise 1.9-2.1% compared with the previously stated 1.8-2.1%. Adjusted EBITDA is projected between $558 and $565 million compared with $553-$563 million mentioned earlier.

The company now envisions adjusted earnings of $1.22-$1.26 per share for the fiscal year, up from previously mentioned $1.17-$1.24. The Zacks Consensus Estimate for the fiscal year is pegged at $1.22.

3 Better-Ranked Stocks You Can’t Miss

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