Bj Wholesale Club

Is BJ’s Wholesale Club Holdings (NYSE:BJ) Using Too Much Debt?

NYSE:BJ

David Iben put it well when he said, ‘Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.’ So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) does have debt on its balance sheet. But is this debt a concern to shareholders?

When Is Debt Dangerous?

How Much Debt Does BJ’s Wholesale Club Holdings Carry?

The image below, which you can click on for greater detail, shows that BJ’s Wholesale Club Holdings had debt of US$548.9m at the end of May 2025, a reduction from US$668.5m over a year. However, it does have US$39.5m in cash offsetting this, leading to net debt of about US$509.4m.

A Look At BJ’s Wholesale Club Holdings’ Liabilities

According to the last reported balance sheet, BJ’s Wholesale Club Holdings had liabilities of US$2.51b due within 12 months, and liabilities of US$2.68b due beyond 12 months. Offsetting this, it had US$39.5m in cash and US$240.4m in receivables that were due within 12 months. So it has liabilities totalling US$4.91b more than its cash and near-term receivables, combined.

While this might seem like a lot, it is not so bad since BJ’s Wholesale Club Holdings has a huge market capitalization of US$14.2b, and so it could probably strengthen its balance sheet by raising capital if it needed to. However, it is still worthwhile taking a close look at its ability to pay off debt.

We measure a company’s debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). Thus we consider debt relative to earnings both with and without depreciation and amortization expenses.

Finally, a business needs free cash flow to pay off debt; accounting profits just don’t cut it. So it’s worth checking how much of that EBIT is backed by free cash flow. Looking at the most recent three years, BJ’s Wholesale Club Holdings recorded free cash flow of 44% of its EBIT, which is weaker than we’d expect. That weak cash conversion makes it more difficult to handle indebtedness.

Our View

When all is said and done, sometimes its easier to focus on companies that don’t even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

Valuation is complex, but we’re here to simplify it.

Discover if BJ's Wholesale Club Holdings might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Source: https://simplywall.st/stocks/us/consumer-retailing/nyse-bj/bjs-wholesale-club-holdings/news/is-bjs-wholesale-club-holdings-nysebj-using-too-much-debt-2

BJ’s Wholesale Club (BJ) Reports Next Week: Wall Street Expects Earnings Growth

BJ’s Wholesale Club (BJ) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended July 2025. This widely-known consensus outlook gives a good sense of the company’s earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.

The earnings report, which is expected to be released on August 22, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management’s discussion of business conditions on theearnings call it’s worth handicapping the probability of a positive EPS surprise.

Zacks Consensus Estimate

This wholesale membership warehouse operator is expected to post quarterly earnings of $1.10 per share in its upcoming report, which represents a year-over-year change of +0.9%.

Revenues are expected to be $5.46 billion, up 4.9% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Price, Consensus and EPS Surprise

Earnings Whisper

Estimate revisions ahead of a company’s earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model — the Zacks Earnings ESP (Expected Surprise Prediction) — has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model’s predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for BJ’s?

For BJ’s, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company’s earnings prospects. This has resulted in an Earnings ESP of +3.45%.

On the other hand, the stock currently carries a Zacks Rank of #3.

So, this combination indicates that BJ’s will most likely beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

While calculating estimates for a company’s future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it’s worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that BJ’s would post earnings of $0.91 per share when it actually produced earnings of $1.14, delivering a surprise of +25.27%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it’s worth checking a company’s Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they’ve reported.

BJ’s appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Should You Invest in BJ’s Wholesale Club Holdings, Inc. (BJ)?

Before you invest in BJ’s Wholesale Club Holdings, Inc. (BJ), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy.

Zacks Investment Research has been committed to providing investors with tools and independent research since 1978. For more than a quarter century, the Zacks Rank stock-rating system has more than doubled the S&P 500 with an average gain of +24.08% per year. (These returns cover a period from January 1, 1988 through May 6, 2024.)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source: https://www.nasdaq.com/articles/bjs-wholesale-club-bj-reports-next-week-wall-street-expects-earnings-growth

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