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Factors to Know Ahead of BJ's Wholesale Club (BJ) Q4 Earnings

BJ's Wholesale Club Holdings, Inc. BJ is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2020 results on Mar 4, before the market opens. We note that the Zacks Consensus Estimate for earnings for the quarter under review has been stable at 64 cents over the past 30 days. The figure suggests a sharp improvement from 40 cents reported in the year-ago quarter.

Notably, this operator of membership warehouse clubs has a trailing four-quarter earnings surprise of 42.3%, on average. In the last reported quarter, this Westborough-based company’s bottom line surpassed the Zacks Consensus Estimate by a significant margin.

Further, the Zacks Consensus Estimate for revenues is pegged at $3,920 million, indicating growth of 12.9% from the prior-year reported figure.

Factors to Note

BJ's Wholesale Club’s top line might have benefited from coronavirus-led stockpiling and food-at-home trend. The company’s focus on simplifying assortments, expanding into high-demand categories and building own-brands portfolio is commendable. It also remains committed toward enhancing omni-channel capabilities and providing value to customers. Cumulatively, these endeavors have been contributing to growth in membership signups and renewals, which in turn is leading to higher membership fee income and decent comparable club sales growth.

The coronavirus pandemic and the resultant stay-at-home trends have led to an increase in online shopping. Clearly, BJ's Wholesale Club has been sparing no effort to ramp up delivery services. The company has been directing resources toward expanding digital capabilities in order to better engage with members and provide them a convenient way to shop, including same-day delivery, curbside pick-up, and buy-online, pickup-in-club.

Clearly, aforementioned factors raise optimism about the outcome of the results. However, margins still remain an area to watch. Impact of costs associated with digital fulfilment, supply chain and COVID-19 related expenses cannot be ruled out. We note that costs related to additional employee payments and benefits, and investments undertaken to preserve safety and health of customers and team members amid the coronavirus crisis may have weighed on margins.

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for BJ's Wholesale Club this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

BJ's Wholesale Club has a Zacks Rank #2 but an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Dollar Tree DLTR has an Earnings ESP of +1.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG has an Earnings ESP of +1.23% and a Zacks Rank #3.

Costco COST has an Earnings ESP of +1.81% and a Zacks Rank #3.

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