BJ's Wholesale Club Holdings, Inc. (BJ) Company Bio
BJ's Wholesale Club Inc. operates warehouse clubs and gas stations in the eastern United States. The company’s warehouse clubs provide electronics, computers, office supplies, home and seasonal products, organic foods and meat, sports equipment, toys, baby products, health and beauty supplies, and jewelry. It also sells products online. The company was founded in 1996 and is based in Westborough, Massachusetts.
BJ Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for BJ's Wholesale Club Holdings Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that BJ's Wholesale Club Holdings Inc ranked in the 97th percentile in terms of potential gain offered. Our DCF model suggests the stock is undervalued by 19106%; returns of such proportions should be viewed with some skepticism, though. As for the metrics that stood out in our discounted cash flow analysis of BJ's Wholesale Club Holdings Inc, consider:
Its compound free cash flow growth rate, as measured over the past 2.19 years, is 1.78% -- higher than 95.09% of stocks in our DCF forecasting set.
BJ's Wholesale Club Holdings Inc's weighted average cost of capital (WACC) is 7%; for context, that number is higher than only 6.64% of tickers in our DCF set.
Relative to other stocks in its sector (Consumer Defensive), BJ's Wholesale Club Holdings Inc has a reliance on debt greater than 64.26% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
PRDO, CCU, SIAF, LOPE, and TUESQ can be thought of as valuation peers to BJ, in the sense that they are in the Consumer Defensive sector and have a similar price forecast based on DCF valuation.
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BJ's Wholesale Club (BJ) reports comparable sales (ex-gas) increased 24.2% in Q2 to top the consensus mark of +15.6%. The company churned up adjusted EBITDA of $216.9M vs. $181.9M consensus. Merchandise gross margin rate outside of gasoline sales and membership fee income was flat during the quarter compared to a...
BJ's Wholesale Club (NYSE: BJ) does not attract as much attention as larger warehouse clubs such as Costco or Walmart-owned Sam's Club. Despite the share price gains, company expansion has only moved westward at a slow pace. Given the growth in store numbers, investors will have to decide whether BJ's has finally become a growth name or if it will likely return to range-bound trading once COVID-19 runs its course.