BJ’s Wholesale Club Holdings, Inc (NYSE: BJ) has been firing on all cylinders and has yet to misfire. The company has been growing via store count, member count, and expanded services and producing market-beating results all along the way. The takeaway from the Q4 results and guidance for 2023 is that those trends are not expected to stop.

Trading at 19.5X its earnings estimate, this stock is no value compared to the broad market but is a value compared to its peers. Walmart (NYSE: WMT), which includes Sam’s Club, trades at 22.5X its earnings, while the best-in-breed pureplay Costco (NYSE: COST) trades closer to 33X. This suggests that BJ’s Wholesale Club could move higher on the dual tailwinds of results and a multiple-expansion, and that combination could get this stock up to a new all-time high. 

BJ’s Has Caps Record Year With Record Quarter 

BJ’s had a good quarter and year, with revenue and earnings hitting record levels that outpaced the analyst consensus estimates. The $4.93 billion in Q4 revenue is up 13.1% compared to last year, and it beat the consensus by 300 basis points which is a substantial margin. The gains were driven by a 9.8% increase in comps, and 8.7% ex-fuel, which was compounded by adding new stores and acquiring fresh foods business earlier this year.

Membership fee, a leading indicator of future growth, increased by 8% and came with a record 90% renewal rate, proving that plans to improve/enhance customer satisfaction are working. Digital, another pillar of the growth strategy, grew by 22%. 

The margin is also good news. The company increased the gross merchandise margin by 30 bps and controlled its spending to drive solid gains on the bottom line. Moving down the figures, operating income grew by 22.7%, adjusted EBITDA by 18.7%, GAAP EPS by 21%, and adjusted EPS by 25% to outpace the Marketbeat.com consensus estimate by 1200 basis points.

The guidance is equally impressive and calls for 4 to 5% comp-store growth ex-fuel and adding new stores. The gross merchandise margin is expected to increase by another 40 bps and offset rising labor and other costs. Earnings are expected to be flat YOY which is the only bad news, albeit offset by the fact analysts were expecting less. 

BJ’s Wholesale Club Returns Capital To Shareholders 

BJ’s Wholesale Club doesn’t pay a dividend which may hold back the price action, but it does repurchase shares. The company repurchased 626,000 shares in Q4 and has retired about 0.95% since last year. That’s worth $152 million to shareholders, and repurchases can be expected to continue. The company also repaid and repositioned some debt, so the balance sheet is improving on top of earnings strength. 

Analysts and institutions are buying this stock and should continue to support the price action. The analysts have the stock pegged at Moderate Buy, although the price target has been slipping. Marketbeat.com’s analyst tracking tools have not picked up any new activity since the earnings report, but it can be assumed that the results will help the price target, if not the sentiment. 

The Technical Outlook: BJ’s Wholesale Club Is In An Uptrend 

BJ’s Wholesale Club is in an uptrend, confirmed following the Q4 release. Pre-market action has the stock up more than 4% and well above the trend line. If the market follows through on this signal, the next hurdle will be the current all-time high, near $80. If that is broken and the market can hold the new high, another sustained updraft may follow. Near-term targets are in the range of $95.