BJ's Wholesale Club (BJ) reported strong results for the second quarter with total sales growth of 17.9% and comp-store sales growth of 15.5%. Its earnings per share were up 31.8% year-over-year and were $0.04 above consensus expectations. The company's efforts to improve its merchandise and increase store traffic continue to drive its sales. The difficult macro economic conditions are also pushing customers into discount stores and wholesale clubs, which offer a better value compared to supermarkets.
However, management disappointed the market by increasing its full-year guidance from $2.04-$2.14 to $2.10-$2.20. Guidance was disappointing because the consensus estimate was $2.14 prior to the second quarter beat, so the company essentially guided lower for the second half of the year.
We maintain our Hold rating. Our target price is $38, which is about 16x our fiscal 2009 EPS estimate.
Read the full analyst report on BJ
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