BJ’s Wholesale Club, Inc. (BJ), a leading warehouse club operator in the United States, recently declared that its Board of Directors has raised the share repurchase program by $200 million bringing the total authorization to about $271.8 million.
Earlier, BJ’s had hinted that it would repurchase about $100 million worth of shares in fiscal 2010. During fiscal 2009, the company bought back 4.1 million shares at an average cost of $31.08, aggregating $127.5 million.
BJ’s has the ability to generate strong cash flow. The company over the last four fiscal years has generated about $1 billion of net cash flow from operating activities. In fiscal year 2010, management expects to generate cash flow between $290 million and $310 million. Healthy cash flow generations will positively impact the company’s underlying valuation.
BJ’s as a warehouse club is uniquely positioned to drive traffic as it offers wider assortments of brands at compelling prices. The company currently operates 187 warehouse clubs in 15 states. Boasting a viable business strategy and a healthy balance sheet, the company offers investors one of the strongest growth stories in this space.
BJ’s in the long run expects to achieve an annual EPS growth of 10% to 15% based on square footage growth of 5% to 6%, rise in comparable sales of 3% to 5% and operating margin expansion of nearly six to eight basis points.
Read the full analyst report on “BJ”
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