BJ’S WHOLESALE CLUB HOLDINGS, INC. (BJ): what the price requires
At today's price, BJ’S WHOLESALE CLUB HOLDINGS, INC. (BJ) is priced for -2.5% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BJ
Headline
| Field | Value |
|---|---|
| Ticker | BJ |
| Company | BJ’S WHOLESALE CLUB HOLDINGS, INC. |
| Current price | $90.35/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 1.3% |
| Operating margin today | 3.9% |
| Margin compression implied | -2.6pp |
| Implied growth | -2.5% |
| Multiple paid | 17x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.3pp.
Reconcile: at the x-ray's 9.3% required return this reads ~12.2%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.00σ |
| cohort percentile (of 69 peers) | 36 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.89x | 5 | expensive |
| Earnings | 2.20x | 3 | expensive |
| Relative | 1.20x | 5 | expensive |
| Growth | 1.27x | 3 | expensive |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $22.06 | 4.10x | yes | FCF base $0.2B, growth 6% (input: historical growth), terminal g 4.0%, WACC 8.1%, 6yr projection |
| DCF Exit Multiple | Growth | $76.65 | 1.18x | yes | Exit EV/EBITDA: 14.2x / 16.2x / 18.2x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $89.07 | 1.01x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 18.4x / 22.0x / 25.6x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $47.74 | 1.89x | yes | BV/sh $16.43, ROE (TTM) 26.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $82.51 | 1.10x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $70.93 | 1.27x | yes | Rev $22.0B, growth 6% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.6x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $52.20 | 1.73x | yes | EPS $4.35, growth 1% (input: historical EPS growth), PEG=14.77 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $31.08 | 2.91x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.77B × (1−27%) / WACC 8.1% → EPV (no growth) |
| Residual Income | Asset | $71.49 | 1.26x | yes | BV $16.43 + 5yr PV of (ROE (TTM) 26.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $40.11 | 2.25x | yes | √(22.5 × EPS $4.35 × BVPS $16.43) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $75.19 | 1.20x | yes | EBITDA $0.90B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $0.01 | 9035.00x | yes | FCF $218.4M / Kₑ 9.3% — zero-growth perpetuity (excluded from median) |
| SBC-Adj FCF Yield | Earnings | $0.01 | 9035.00x | yes | SBC-adj FCF $0.17B (FCF $0.22B − SBC $0.05B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $41.09 | 2.20x | yes | EPS $4.35 × (8.5 + 2×1.4%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $6.17 | 14.64x | yes | BV $16.43 × (ROIC 3.1% / WACC 8.1%) |
| P/Sales Sector | Relative | $339.54 | 0.27x | yes | Revenue $21.97B × sector P/S 2.0x |
| PEG Fair Value | Relative | $21.75 | 4.15x | yes | EPS $4.35 × (PEG 1.5 × growth 1.4% (input: historical EPS growth)) → PE 2.1x |
| Earnings Yield | Earnings | $47.03 | 1.92x | yes | EPS $4.35 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.2b |
| Net debt / NOPAT (after-tax) | 1.90x |
| Net debt / operating income (pre-tax) | 1.38x |
| Share count CAGR (buyback) | -1.4% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- BJ's Wholesale Club runs on the membership model: fee income reached $132.4 million in the first quarter of fiscal 2026, up from $120.4 million a year earlier, high-margin recurring revenue that is the real profit engine behind a 3.8% retail operating margin.
- The biggest specific risk is that the price already credits durable growth: only the relative-multiple and forward cash-flow methods reach $88.53, while the asset-value and earnings-power lenses land well below it, so the stock is priced as a grower, not a 3.8%-margin retailer.
- Watch club expansion and membership trends, with Texas memberships running 33% ahead of plan and full-year guidance for comparable sales excluding gas of 2% to 3% and adjusted earnings per share of $4.40 to $4.60.
Bull Case
Start with the bear's strongest objection, because the bull case answers it. The worry is that BJ's is a thin-margin grocery business dressed up as a growth stock: it earns a 3.8% operating margin, and squeezing a few extra basis points out of selling milk and gasoline is not a thesis. That misreads where the money comes from. BJ's does not make its profit on the markup. It makes it on the membership. Fee income reached $132.4 million in the first quarter of fiscal 2026, up from $120.4 million a year earlier. That is high-margin, recurring, prepaid revenue the company collects whether or not the member shops, and it is what turns a low-margin retail operation into a 26.3% return on equity. The thin retail margin is the feature, not the bug: the low markup is the reason members keep renewing.
The growth underneath the membership base is real and broad. Total comparable club sales rose 6.3% in the first quarter, and even stripping out volatile gasoline the comp grew 1.5%, with total revenue up 9.9% to $5.7 billion. The digital side is compounding faster: digitally enabled comparable sales climbed 28% year over year as members adopt curbside pickup, same-day delivery, and ExpressPay. And the geographic expansion is finding receptive ground, with membership in the newer Texas clubs running 33% ahead of plan. A warehouse club's economics improve as it scales, because the fixed costs of a club spread over a larger member base, and the data shows the base growing in both existing and new markets.
Capital allocation closes the loop. The company is accelerating buybacks, and the share count has fallen about 1.1% a year, reducing the share count while membership income compounds. The balance sheet carries this comfortably: net debt sits at roughly 0.58 times operating income, low for a retailer with steady cash generation. Management guides full-year comparable sales excluding gas to 2% to 3% and adjusted earnings per share to $4.40 to $4.60, and analyst sentiment has firmed, with the consensus at Buy and recent targets clustering well above the current price. The bull case is that a recurring-revenue engine with a 26.3% return on equity is growing its member base, and the price is paying for that to continue, which the prints support.
Bear Case
The assumption baked into the price is durable growth, and the most fragile piece of it is the membership-fee tailwind that just lapped its own boost. At $88.53, only the relative-multiple and forward cash-flow methods reach the price; the asset-value and earnings-power lenses land well below. That means the market is paying for BJ's to keep growing, not for the business it has demonstrated. The problem is that one of the cleanest growth drivers is about to fade by management's own admission: the company expects membership fee income growth to moderate in coming quarters as it laps last year's fee increase. Fee income jumped to $132.4 million partly because the fee itself went up; once that comparison resets, the recurring-revenue engine grows more slowly, and a price built on continued acceleration has less to lean on.
The competitive reality is the second pressure. BJ's is the smallest of the major warehouse clubs, and it competes against a far larger rival whose scale advantages compound in exactly the dimensions that matter for this model: buying power, club density, and membership prestige. It also faces broad-line discounters in the discount-store cohort, names like Target, Dollar General, and Burlington, all fighting for the same value-seeking household budget. A 3.8% operating margin leaves little room to absorb a price war, and analysts have flagged softer merchandise margins and near-term cost pressures as the squeeze point. The ex-gasoline comparable sales growth of 1.5% in the quarter is the honest number underneath the headline: strip out fuel volatility and the core club is growing low single digits, which is a steady business, not the high-growth one the multiple implies.
If the priced-in growth mean-reverts toward what the static methods support, the multiple compresses meaningfully. The earnings-power lens, capitalizing normalized profit with no growth, lands near $43.94, and a book-value-plus-profitability read lands near $47.40, both roughly half the current price. That gap is the bull's growth assumption made visible: if BJ's settles into low-single-digit core comps with moderating fee growth, there is no obvious reason it deserves a multiple twice what its earnings power alone supports. The balance sheet is not the risk here; net debt is a manageable 0.58 times operating income and the company is not burning cash. The risk is purely that the price assumes a continuation of acceleration that the company has signaled is slowing.
Valuation
What the price assumes is modest in margin terms but demanding in growth terms, and that combination is the whole story. Invert $88.53 and the embedded operating margin works out near 1.2%, below the 3.8% BJ's earns today. On the surface that looks like the price assumes deterioration, but for a warehouse club the operating margin is the wrong single lens: the profit lives in the membership fee, not the retail markup. The more useful read is the disagreement among the methods, which lines up cleanly: the price is a growth bet on a thin-margin retailer.
The methods split into two camps. The relative-multiple and forward cash-flow families reach the price: a sector P/E read lands almost exactly at $87.81, and the exit-multiple cash-flow version actually lands above the price near $108.01, though it gets there by holding today's EBITDA multiple flat for the forecast. The asset-value and earnings-power families say expensive: a book-value-plus-profitability read lands near $47.40 and the no-growth earnings-power value near $43.94, both roughly half the price. So the pattern is unambiguous. The methods that credit forward growth defend the price; the methods that value only what the business has demonstrated put it at half. That spread is the premium the market pays for BJ's to keep growing its member base and its fee income. It is a growth-and-durability bet, which the static frames structurally cannot price.
Solvency bounds the downside and it is not the concern. Net debt runs about 0.58 times operating income, the company generates real free cash flow, and it is not burning cash. The share count has fallen roughly 1.1% a year as buybacks accelerate, so capital is being returned while the membership base compounds. The decisive point for this stock is not the balance sheet, which is sound, but the durability of the growth the price embeds: a 26.3% return on equity and a growing member base justify a premium to bare earnings power, and the question the investor underwrites at $88.53 is whether the comparable-sales and fee-income growth that got the stock here continues as the prior fee increase laps out.
Catalysts
The most recent print set a constructive tone. First-quarter fiscal 2026 total revenue rose 9.9% to $5.7 billion, with comparable club sales up 6.3% and up 1.5% excluding gasoline. Membership fee income reached $132.4 million against $120.4 million a year earlier, driven by acquisition, retention, and higher-tier penetration, while digitally enabled comparable sales climbed 28% as members leaned into curbside pickup and same-day delivery. The company maintained full-year guidance for comparable sales excluding gas of 2% to 3% and adjusted earnings per share of $4.40 to $4.60.
The forward driver to watch is club expansion. Newer Texas clubs are running 33% ahead of plan on membership, the early evidence that the geographic push beyond the Northeast is taking hold. The offsetting watch item is fee income: management expects membership fee growth to moderate in coming quarters as it laps the prior year's fee increase, so the next few prints will show whether underlying member growth can carry the line once the price comparison resets. Analyst sentiment has firmed alongside the results, with a consensus Buy rating and recent target moves higher, including raises to $118 at Citi and $110 at Wells Fargo, against an average target near $102. The next quarterly report is the read on whether core comps and new-club ramps sustain the growth the price is paying for.
Peer Cohorts (Per Segment, With Filing Citations)
Retail operations (reported)
- COST (COSTCO WHOLESALE CORP /NEW)
- (no filing in the citation store)
- PSMT (PriceSmart, Inc.)
- (no filing in the citation store)
- WMT (WALMART INC.)
- (no filing in the citation store)
- TGT (TARGET CORPORATION)
- (no filing in the citation store)
- DG (DOLLAR GENERAL CORP)
- (no filing in the citation store)
- DLTR (DOLLAR TREE, INC.)
- (no filing in the citation store)
- OLLI (Ollie’s Bargain Outlet Holdings, Inc.)
- (no filing in the citation store)
- FIVE (Five Below, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
BJ's Q1 fiscal 2026 results, May 2026 · BJ's fiscal 2026 guidance, 2026 · BJ's fiscal 2026 commentary, 2026 · BJ's fiscal 2026 disclosures; company financials · analyst consensus, 2026 · analyst commentary, 2026 · analyst actions, 2026