BJ’S WHOLESALE CLUB HOLDINGS, INC. (BJ): what the price assumes

In the published model solve dated 2026-Q2, anchored at $90.60, BJ’S WHOLESALE CLUB HOLDINGS, INC. (BJ) is priced for -3.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/BJ

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.2% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; 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.

Families that justify the price: Relative, Growth 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=18)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Membership dues are about 2% of the revenue line and something close to two thirds of the profit, which is why a club retailer earning a 3.9% operating margin is not the thin business that margin implies.
• Comparable club sales rose 6.3% in the quarter ended May 2, 2026, but stripped of gasoline they rose 1.5%, below the 2% to 3% full-year pace management guided to in March.
• The footprint is regional rather than national, at 263 clubs and 199 gas stations across 21 states as of January 31, 2026, and the FY2026 10-K rests its competitive claim on density rather than reach: "In our originating New England market, which has high population density and generates a disproportionate part of U.S. gross domestic product (\"GDP\"), we operate nearly three times the number of clubs compared to the next largest warehouse club competitor".

Bull Case

One line decides this business, and it is not the sales line. Membership fee income reached 132.4 million dollars in the quarter ended May 2, 2026, up from 120.4 million a year earlier. Run that at an annual pace and the dues cover a large majority of the roughly 846 million dollars of operating profit the entire company produced over the trailing year. Everything else, the 22 billion dollars of groceries and fuel and patio furniture moving through 263 clubs, exists mostly to make the dues worth paying. Change the renewal behavior and the verdict on the stock changes with it. Change the merchandise margin by a few basis points and almost nothing does.

That structure explains the shape of the income statement, which otherwise looks alarming. A 3.9% operating margin sounds like a business with no pricing power, and in a sense that is the point: the merchandise is sold close to cost on purpose. The FY2026 10-K describes the pricing discipline as a standing exercise rather than a slogan, identifying "the four supermarket chains (or banners) most prevalent in our clubs' primary trade areas" and building "a 'basket' of 100 popular manufacturer-branded grocery food and non-food items" to measure the gap. The filing then puts a number on what the member gets, claiming they "can save over ten times their $60 Club membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ's on manufacturer-branded groceries". A membership that pays for itself ten times over is a membership people renew without thinking about it.

The second structural advantage is geographic rather than financial. BJ's does not compete nationally; it competes on the northeastern seaboard, where it says it runs "nearly three times the number of clubs compared to the next largest warehouse club competitor". Density has practical consequences in this format: shorter delivery routes, a fixed advertising spend spread across more locations, and a gasoline network of 199 stations that gives members a weekly reason to appear. The company notes that its marketing runs largely through its own membership programs and mailings, which "result in lower marketing expenses compared to typical retailers". That is a cost line most retailers cannot switch off.

Capital allocation has been consistent with a business that believes its own cash flow. The share count has fallen about 1.4% a year since April 2022, which is buyback deployment showing up in the one place it cannot be dressed up. Book value per share sits near $16.43 while the company earns a return on equity close to 27%, so retained profit compounds at a rate the clubs themselves cannot absorb. Against a peer set that includes COST at a 3.82% operating margin on 293.6 billion dollars of revenue and WMT at 4.16%, the merchandise economics here are ordinary. The dues are not, and that is where the bull case lives.

Bear Case

The competitive problem is one of arithmetic, and the names attached to it are the largest in American retail. COST runs 293.6 billion dollars of revenue growing 9.2% a year, and WMT runs 725.3 billion growing 5.9%. Both operate the same warehouse-club or supercenter playbook, both buy from the same vendors, and both do it at more than ten times the volume of a 22 billion dollar regional chain. In a format whose entire promise is that the operator has negotiated a better price than the supermarket, procurement scale is not one advantage among several. It is the advantage. The FY2026 10-K acknowledges what that means from the inside, warning that if the company cannot "purchase goods at attractive prices relative to our competitors, our growth could suffer", and that raising member prices in response would mean "our member loyalty could suffer". Those are the only two doors.

The recent evidence is not reassuring on which door is opening. Comparable club sales in the quarter ended May 2, 2026 rose 6.3%, which looks healthy until you remove gasoline and the figure falls to 1.5%, against full-year guidance of 2% to 3% given in March. Fuel is the lowest-quality line in the business: it is priced off a commodity, it carries thin economics, and it flatters a headline comparable number when pump prices move. Strip it out and the underlying club business grew at roughly the rate of grocery inflation, which is another way of saying members are not putting more in the cart.

That matters because of what the price is leaning on. At about 18 times company-wide operating income, today's price does not require growth. Inverted at the cost of capital the model assumes, it embeds operating profit drifting slightly downward rather than upward, which is a genuinely undemanding requirement. And yet the static methods still land underneath the price. The peer-multiple lens comes closest, with the price about 24% above where it settles, while the earnings-power methods sit far lower, the price standing about 126% above them. The reconciliation is the discount rate: the priced-in read uses a low cost of capital and a long terminal life, while the earnings-power methods capitalize a five-year average of operating profit at a higher required return with nothing credited for growth. Shift the assumed cost of capital by one percentage point and the growth the price requires moves by more than seven points. The bear does not need the company to shrink. It needs only for the market to demand a slightly higher return from a regional retailer facing two national ones, and the multiple does the rest.

The balance sheet gives the argument some leverage. Funded net borrowings run about 1.17 billion dollars, or roughly 3.26 billion once the lease obligations behind 263 clubs are counted, which is about 1.4 times operating profit on the funded measure. That is not a distress profile. But club retail is a fixed-cost business where a modest deterioration in traffic lands hard on the profit line, and the FY2026 10-K is explicit that member spending is macro-sensitive, listing "decreased consumer confidence, higher fuel, energy and other commodity costs" among the pressures that "could reduce, and in some cases have reduced, consumer spending". The dues insulate the profit line, but they do not insulate the multiple.

Valuation

Inverting the price here produces an unusual answer. About 18 times company-wide operating income, run backwards at the cost of capital the model assumes, embeds company-wide operating growth of about -1.6% a year over the next five years, a slight decline rather than an advance. The market, on that reading, is not paying for expansion at all. It is paying for the existing profit stream to keep showing up. That is worth holding lightly: the answer is unusually sensitive to the discount rate, and moving the assumed cost of capital by a single percentage point shifts the implied growth by more than seven points. The direction of the finding is more useful than its decimal.

The methods used to triangulate the price disagree, and none of them reaches it. Peer multiples land nearest, with the price about 24% above where that family settles. The earnings-power methods land furthest away, the price standing about 126% above them, and the mechanism behind that distance is worth stating plainly: one of those methods takes a five-year average of operating income, taxes it, and capitalizes the result at the cost of capital with no growth credited whatsoever. Book-value methods also sit below the price. So the priced-in read says the price demands nothing, and the static methods say the price is above what they can defend, which is not a contradiction so much as an argument about the required return. The first uses a low one because the business is stable; the second uses a higher one because it refuses to assume stability. Which is right is the actual investment question here.

The base under all of it is disclosed and unusually concrete for a retailer. As of January 31, 2026 the company operated "263 warehouse clubs and 199 gas stations in 21 states", generating about 22 billion dollars of trailing revenue and roughly 846 million dollars of operating income. Membership dues account for only about a fiftieth of that revenue, yet they arrive before any merchandise moves and carry essentially no cost of goods behind them, so they contribute a share of the profit far out of proportion to their size. The reported operating margin near 3.9% therefore describes the merchandise operation rather than the enterprise sitting on top of it.

Against the cohort, the merchandise economics are unremarkable and the comparison is instructive precisely because of that. COST earns a 3.82% operating margin on 293.6 billion dollars of revenue and WMT earns 4.16% on 725.3 billion, so the two largest operators in the format run within a rounding error of the smallest one here. DG earns 5.26% and DLTR 8.82%, but neither charges an entry fee, and neither is selling gasoline as a traffic driver. The peer-multiple lens reaches nearest to the price for exactly this reason: on the metrics the format is judged by, this business looks like its larger relatives.

Solvency does not carry much of the argument either way. Funded net borrowings sit near 1.17 billion dollars, about 1.4 times operating profit, or roughly 3.26 billion dollars on the lease-inclusive measure that treats the club leases as obligations. The company is not burning cash, and the share count has declined about 1.4% a year since April 2022, so the equity base is shrinking rather than being diluted. What is genuinely at stake in the price is the multiple the market is willing to apply to a stable, regional, low-margin operator, not whether that operator can pay its bills.

Catalysts

Two different stories came out of the quarter ended May 2, 2026, and they were in the same sentence. Comparable club sales rose 6.3%; excluding gasoline, they rose 1.5%. The gap between those figures is the fuel business, which moves with pump prices rather than with member behavior. The number that describes member behavior came in below the 2% to 3% ex-gasoline pace management guided to for the full year on March 5, 2026, and that guidance was left unchanged when the quarter was reported.

The membership line moved the other way. Fee income was 132.4 million dollars for the quarter against 120.4 million a year earlier. Dues grew at a double-digit pace while merchandise comparables grew at low single digits, which is the pattern a club operator wants if it has to choose: the annuity is compounding faster than the store traffic behind it. Whether that holds depends on renewals, and renewals are the thing a member reconsiders only once a year.

Second-quarter results are scheduled for the morning of August 21, 2026. The specific thing to watch is narrow: whether the ex-gasoline comparable number closes the gap to the 2% to 3% full-year range, or whether management reduces the range to meet the trend. One of those outcomes leaves the growth assumption in the price intact. The other tests how much of the multiple was resting on it.

Peer Cohorts (Per Segment, With Filing Citations)

Retail operations (reported)

• COST (COSTCO WHOLESALE CORP /NEW)
• FY2025 10-K: …and Operating Risks We are highly dependent on the financial performance of our U.S. and Canadian operations. Our financial and operational performance is highly dependent on our U.S. and Canadian operations, which comprised 86% and 84% of net sales and operating income in 2025. Within the U.S., we are highly…
• FY2025 10-K: …warehouses and depots. We compete with other retailers and businesses for suitable locations. Local land use and other regulations restricting the construction and operation of our warehouses and depots, as well as local community actions opposed to the location of our warehouses or depots at specific sites and the…
• PSMT (PriceSmart, Inc.)
• FY2025 10-K: …retailers, including Walmart Inc. in Central America and Grupo Éxito in Colombia and Cencosud in South America. We have noted that certain retailers are making investments in upgrading their locations or opening new stores which may result in increased competition. Further, it is possible that other warehouse club…
• FY2025 10-K: …already served by existing warehouse clubs may draw Members away from existing warehouse clubs and adversely affect comparable store sales performance. We operate in relatively small markets. Given the growth of our sales over the past few years, market saturation could impact the rate of future sales growth. We…
• WMT (WALMART INC.)
• FY2025 10-K: …for accurate delivery to customers of merchandise purchased through our digital platforms or through our omni-channel integration of our physical and digital operations. A failure to respond effectively to competitive pressures and changes in the retail and other markets in which we operate, omni-channel innovations…
• FY2025 10-K: …the "Company") is a people-led, technology-powered omni-channel retailer dedicated to helping people around the world save money and live better by providing the opportunity to shop in both retail stores and through eCommerce. Through innovation, the Company is striving to continuously improve a customer-centric…
• TGT (TARGET CORPORATION)
• FY2025 10-K: …and Analysis of Financial Condition for 2023, as compared to 2022, is included in Part II, Item 7, MD&A to our Annual Report on Form 10-K for the year ended February 3, 2024 . Net Sales Net Sales includes Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card…
• FY2025 10-K: …drug stores, supermarkets, direct-to-consumer brands, and other forms of retail commerce. Our ability to positively differentiate ourselves from other retailers and provide compelling value to our guests largely determines our competitive position within the retail industry. Intellectual Property Our brand image is a…
• DG (DOLLAR GENERAL CORP)
• FY2025 10-K: …of the retail marketplace and result in competitors with greatly improved competitive positions, which could materially affect our financial performance. Our ability to effectively compete will depend substantially upon our continued ability to develop and execute compelling and cost-effective strategies and…
• FY2025 10-K: ,358 ​ $ 24,115 ​ $ 40,683 ​ Year ended February 3, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-tax ​ $ 20,502 ​ $ 26,920 ​ $ 25,249 ​ $ 72,671 ​ Net of tax ​ $ 15,893 ​ $ 20,868 ​ $ 19,573 ​ $ 56,334 ​ ​ ​ 66 Table of Contents 10. Segment reporting ​ The Company manages its business on the basis of one reportable operating…
• DLTR (DOLLAR TREE, INC.)
• FY2025 10-K: …operations and financial condition of our continuing operations. Overview We are a leading operator of more than 8,800 retail discount stores, as of February 1, 2025, offering merchandise predominantly at the opening price point of $1.25, with additional offerings at higher price points. Our net sales are derived…
• FY2025 10-K: …results. Our highest sales periods are during the Christmas and Easter seasons, and we generally realize a disproportionate amount of our net sales and our operating and net income during the fourth quarter. In anticipation, we stock extra inventory and hire many temporary employees to prepare our stores and help…
• OLLI (Ollie’s Bargain Outlet Holdings, Inc.)
• FY2025 10-K: In addition, in fiscal 2024, the Company acquired a number of new locations through the bankruptcy auction processes of various retailers, at favorable rental terms and leasing structures to current market conditions. This augments the Company's pipeline of new stores for our accelerated growth strategy. Our strong…
• FY2025 10-K: …and other improvements in their competitive positions, as well as result in the provision of a wider variety of merchandise at competitive prices by these consolidated companies, which could have a material adverse effect our business, financial condition, and results of operations. We cannot guarantee that we will…
• FIVE (Five Below, Inc.)
• FY2025 10-K: . We also employ district managers who are responsible for overseeing the operations of 10 to 15 stores, on average, and regional directors who are responsible for overseeing the operations of our district managers. We are guided by a philosophy that recognizes strong sales performance and customer service, allowing…
• FY2025 10-K: …and retain customers on a cost-effective basis and our ability to operate, support, expand and develop our internet operations, website and software and other related operational systems. Although we believe that our participation in both e-commerce and physical store sales will be a distinct advantage for us due to…

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.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• 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.