BJ's Wholesale Club Holdings, Inc. (BJ) is about to face the music. The warehouse retailer reports third-quarter earnings before the market opens on Friday, November 21, and Wall Street's most accurate forecasters have been busy recalibrating their expectations downward.
Analysts are projecting quarterly earnings of $1.09 per share, which would represent a notable decline from the $1.18 per share BJ's posted in the same period last year. Revenue expectations sit at $5.34 billion, up from $5.1 billion a year ago. So revenue is growing, but profitability appears to be compressing, which is never a great combination.
The Marlborough, Massachusetts-based company did manage to beat expectations last quarter. On August 22, BJ's reported second-quarter adjusted earnings of $1.14 per share, topping the consensus estimate of $1.09. But that win doesn't seem to have bought much goodwill heading into this report.
Here's what the analysts with the best track records have been saying recently, and it's not particularly encouraging. Evercore ISI Group analyst Greg Melich, who boasts a 76% accuracy rate, maintained his In-Line rating but slashed his price target from $100 to $85 on November 17. That's a meaningful cut just days before earnings.
Wells Fargo's Edward Kelly, working with a 64% accuracy rate, kept his Overweight (read: buy) rating but dropped his target from $120 to $105 on November 12. JP Morgan's Christopher Horvers followed a similar pattern on November 10, maintaining his Neutral stance while cutting his target from $110 to $90.
Not everyone is pessimistic, though. BTIG analyst Robert Drbul initiated coverage with a Buy rating and a $120 price target on October 15, showing some confidence in the retailer's longer-term prospects. His accuracy rate sits at 61%. Meanwhile, Citigroup's Paul Lejuez maintained his Buy rating but trimmed his target from $120 to $115 back on August 25.
BJ's shares fell 0.8% on Thursday to close at $90.59, which puts the stock right in the neighborhood of some of these newly reduced price targets. That suggests the market has already priced in at least some of the concerns these analysts are flagging.
The pattern here is clear: even analysts who like the stock are lowering their expectations heading into Friday's report. Whether that turns out to be prudent caution or excessive pessimism, we'll find out soon enough.
