BJ's Wholesale Club topped earnings views Thursday, as the discount giant shrugged off concerns that inflation would keep consumers away. BJ stock shot higher Thursday .
BJ's Wholesale has beaten quarterly earnings expectations since Q2 2018, averaging 20.8% above consensus targets over the past two years. The company now has six straight quarters of sales growth under its belt.
The latest earnings come as the annual rate of inflation in July dropped to 8.5%, down from 9.1% in June. The deceleration owed largely to decreasing gas prices, but federal data shows the prices of food and other goods are still on the rise. However, due to its membership-only business model, BJ's has held up better than many in the current economic environment.
BJ's Wholesale Earnings
Estimates: Wall Street forecast BJ's to earn 80 cents per share on $4.7 billion in revenue. Same store sales, excluding fuel, were expected to be 3.9%.
Results: Earnings grew 29% to $1.06 per share in the second quarter for the wholesaler. Revenue increased 24% to $5.1 billion in Q2. Same store sales, not including fuel, grew 7.6% year-over-year.
BJ's Wholesale CEO Bob Eddy said in a statement Q2 profit and revenue increases came after the business made "gains in traffic and market share" despite inflation impacting consumer spending.
Eddy said BJ's Wholesale member base is growing in both quality and size, and that the company is also growing its digital business.
BJ's Wholesale started the year off strong and hit 6.5 million members. The membership-only warehouse retailer reported 20% earnings growth to 87 cents per share for the first quarter. Revenue jumped 16.3% to $4.39 billion.
"Our business model is designed to work well in the current consumer environment where value is king and we believe we are well-positioned for growth by doing what we do best — delivering great value to our members," Eddy said.
BJ Stock Outperforms Peers Amid Retail Red Flags
BJ shares were up 7.26% to 74.15 in Thursday's market trading. On Wednesday, shares dropped 0.16% to 69.13.
BJ stock is consolidating just below the 71.10 buy point shown in MarketSmith. The stock has bobbed over and under the entry for the past four weeks, but the pullbacks have stopped just short of triggering the automatic sell rule.
Shares are finding support around the short-term 21-day moving average. Keep in mind, the double-bottom base is a fourth-stage pattern. Bases of third stage or later are considered late-stage bases. Late-stage bases carry more risk than earlier-stage bases.
BJ's Wholesale ranks first in the Retail-Discount & Variety industry group. The company is ahead of Dollar Tree, Dollar General and Ollie's Bargain Outlet among others.
The stock has a 96 Composite Rating out of 99. It has a 94 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share price movement with a 1 to 99 score. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock's EPS rating is 95.
Big Week For Big Box Stores
Walmart began an important week for retail businesses Monday topping earnings estimates. Meanwhile Target had mixed Q2 financial results, missing on earnings but meeting revenue predictions.
Off-price specialist TJX missed on revenue early Wednesday with Ross Stores due later this week.
Walmart's Dow Jones peer Home Depot topped Q2 views early Tuesday, with rival home improvement chain Lowe's reported mixed results.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
