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:
Below please find a table outlining a discounted cash flow forecast for BJ, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that BJ's Wholesale Club Holdings Inc ranked in the 98th percentile in terms of potential gain offered. As the table below shows, the model suggests the stock is dramatically undervalued -- investors should note, though, that such returns are always unlikely and not to be expected. As for the metrics that stood out in our discounted cash flow analysis of BJ's Wholesale Club Holdings Inc, consider:
The company's compound free cash flow growth rate over the past 2.44 years comes in at 1.57%; that's greater than 93.95% of US stocks we're applying DCF forecasting to.
BJ's Wholesale Club Holdings Inc's weighted average cost of capital (WACC) is 8%; for context, that number is higher than merely 4.39% 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 66.99% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
SIAF, GHC, HFFG, CCU, and PRDO 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.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
The COVID-19 pandemic made 2020 quite an eventful year for supermarkets and grocery chains. The likes of Walmart, Costco, Dollar General and Target adapted quickly to changing consumer behavior by offering several contactless delivery options. They also ramped up efforts to ensure adequate supply as Americans stockpiled groceries and essentials amid lockdown fears. What's more, the retail space saw unprecedented e-commerce sales. It would be unfair to expect top-line growth rates experienced during the lockdowns to repeat this year. That said, Wall Street experts see continued upside in certain retailers even as the pandemic tailwinds subside.