What Happened:
Shares of membership-only discount retailer BJ’s Wholesale Club (NYSE:BJ) jumped 8.7% in the afternoon session after the company reported fourth-quarter results that slightly topped analysts' EPS expectations. On the other hand, its full-year earnings forecast missed analysts' expectations. Revenue also missed by a narrow margin during the quarter. Regardless, management remained upbeat as the company continued to record strong membership growth alongside market share gains in clubs and pumps due to "acceleration in traffic and growth in units sold." Overall, the results were mixed, with the market likely shrugging off the negatives.
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What is the market telling us:
BJ's's shares are not very volatile than the market average and over the last year have had only 3 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago, when the stock dropped 6.8% on the news that the company reported second quarter earnings that missed analysts' revenue expectations, though EPS beat. Free cash flow also declined year-on-year and came in below expectations.
Management hinted at potential near-term headwinds, stating, "...However, we also continue to navigate shifts in consumer behavior driven by the broader macroeconomic environment." Consequently, the company revised its forecast for same-store sales growth (excluding the impact of gasoline) for FY'2023. Initially projected to experience a potential year on year increase of 4% to 5%, the growth forecast has now been adjusted to approximately 2% year-over-year. Lastly, EPS guidance was lowered from $3.92 (representing flat year-on-year growth) to $3.80 to $3.92, this adjustment suggests the company's performance might not match previous expectations. Overall, it was a weaker quarter for the company, with the revised guidance likely to raise concerns among investors.
BJ's is up 16.8% since the beginning of the year. Investors who bought $1,000 worth of BJ's's shares 5 years ago would now be looking at an investment worth $3,135.
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