Earnings Preview: BJ’s – Analyst Blog

A viable business strategy is helping BJ’s Wholesale Club Inc. (BJ) to drive traffic as it offers a wider assortment of brands at compelling prices in relation to supermarket competitors. The company will report its first-quarter 2010 results before the bell on Wednesday.

BJ’s, one of the leading warehouse club operators in the United States, indicated that consumers flocked to its stores for food and other necessities when the recession hit. However, they are still shying away from discretionary purchases.

We believe that the stiff competition and sluggish sales of discretionary items may affect its top-line performance.

The current Zacks Consensus Estimate for first-quarter 2010 is 43 cents, which has remained stagnant forthe last 7 days; only 1 analyst out 17 covering the stock has raised the estimate. The current Zacks Consensus Estimate represents a year-over-year decline of 4.4%.
For fiscal 2010, the current Zacks Consensus Estimate is $2.61 per share, which represents a 5.2% increase over fiscal 2009 earnings. In the last seven days, the Zacks Consensus Estimate has not shown any changes; only 1 analyst out 17 covering the stock raised the estimate.

With respect to earnings surprises, BJ’s has performed across a wide range of earnings expectations over the last four quarters from negative 2.2% to positive 3.2%. The average remained positive at 0.6%; meaning that BJ’s has beaten the Zacks Consensus Estimate by an average of 0.6% in the last four quarters.

BJ’s shares are maintaining a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation. Our long-term recommendation for the stock also remains ‘Neutra’.