On Thursday, Loop Capital adjusted its stance on BJ's Wholesale (NYSE: BJ), downgrading the stock from Buy to Hold and revising the price target to $80 from the previous $85. The decision was influenced by a reassessment of the company's near-term financial outlook based on a discounted Net Operating Profit After Tax (NOPAT) model.
The firm's analysis included discussions with BJ's management before their quiet period and an evaluation of both BJ's and its competitors' store performance in the Metro NY market. These factors led to the adjustment of sales and margin forecasts for BJ's Wholesale.
Specifically, Loop Capital now anticipates that BJ's merchandise same-store sales (SSS) will remain flat in the first quarter of the fiscal year, which is a change from the +6% growth observed in the first quarter of the previous fiscal year, F1Q:23. Additionally, the firm has reduced its first-quarter gross margin estimate by 30 basis points, citing increased discounting efforts in the face of persistent high inflation.
As a result of these revisions, Loop Capital has also lowered its earnings per share (EPS) estimate for BJ's Wholesale for the year 2024. The new EPS forecast is $3.90, which is a decrease of eight cents from their previous estimate and now sits three cents below the consensus. This updated financial outlook reflects the analyst's more conservative expectations for the company's performance in the near term.
InvestingPro Insights
In light of Loop Capital's recent downgrade of BJ's Wholesale, real-time metrics from InvestingPro provide additional context for investors. BJ's Wholesale currently holds a market capitalization of $10.01 billion and is trading at a P/E ratio of 19.11, which is considered high relative to its near-term earnings growth. Moreover, the company's Price/Book ratio stands at 6.86, indicating a premium compared to the book value of its assets.
Despite these valuation concerns, analysts predict BJ's Wholesale will be profitable this year, with the company having been profitable over the last twelve months. This performance is reflected in a solid return on assets of 8.04%. Notably, BJ's does not pay a dividend, which may influence the investment strategies of income-focused shareholders.
For those seeking a deeper analysis, there are additional InvestingPro Tips available that can provide further insights into BJ's Wholesale's financial health and future prospects. Interested investors can explore these tips by visiting: https://www.investing.com/pro/BJ. To enrich your investment decision-making with comprehensive data and analytics, use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. There are six more InvestingPro Tips available for BJ's Wholesale, offering a broader perspective on the company's financial position and market performance.
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