The stock trades at 20 times earnings, a deep discount to its big-box competitors. It's time to buy this proven growth story. By Dan Victor
BJ's Wholesale Club Holdings wins over shoppers with bargains on bulk-sized groceries and household goods. Investors will find the stock offers good value at current prices as well.
For more than four decades, the Marlborough, Mass.-based retailer has pioneered the private discount store concept, attracting a loyal customer following that today numbers eight million members in 260 locations. Building from its footprint on the East Coast, BJ's is in the midst of the most ambitious expansion in its history, accelerating club growth by pushing westward and entering new states, including Alabama and Texas.
Jefferies analyst Corey Tarlowe agrees with this assessment, having taken a decisively bullish view on the stock in November. His price target of $120 implies 27% upside from Wednesday's close of $94.65. Citing updated club growth plans as a potential catalyst in a recent note, Tarlowe says BJ's can reach 350+ stores with an expansive addressable market and an ability to "more predictably and profitably grow units."
Recent results show the growth strategy's success. BJ's has reported 12 consecutive quarters of market share gains and an even longer streak of increasing club traffic. Rising same-store comparable sales have driven profit to record levels -- a trend that may just be getting started.
Yet the market appears to be discounting the company's momentum. At 20 times earnings, shares of BJ's trade at a deep discount to industry peers such as Costco Wholesale, at a price/earnings multiple of 46, and Walmart, at 40.
This gap may be unjustified. More importantly, it presents a clear opportunity for investors. Down 22% from its 52-week high, it's time to buy this proven growth story ahead of a rebound in 2026 and beyond.
In a crowded retail landscape, BJ's has positioned itself between traditional grocery stores and larger members-only warehouse clubs. The company claims that its food items are on average 25% cheaper than at a typical supermarket, with the added benefit for customers of in-club services and even low-price gas stations at most locations.
Compared with its larger rivals Costco and Walmart's Sam's Club, BJ's features a smaller club format, skipping the high-end electronics and luxury designer brands. Unlike Costco and Walmart, which have international reach, BJ's is focused exclusively on the U.S. Still, it offers a wider variety of grocery items and staples, often in more manageable package sizes. The company says this makes its clubs more practical for everyday shopping.
That combination of value and convenience has translated into a long history of steady membership growth, up nearly 6% in the past year, backed by a renewal rate consistently above 90%. This was achieved even as BJ's hiked its basic club annual fee by $5, from $55 to $60, in early 2025, the first increase in seven years.
While the jump in membership fee income has helped bolster total revenue and earnings, BJ's performance extends well beyond that tailwind. In the third quarter, comparable club sales, excluding gasoline -- not counted given the volatility of fuel prices -- increased by 1.8% year over year and 5.5% on a two-year stacked basis.
Ahead of fourth-quarter earnings, expected by early March, management has guided for full-year comparable club sales to grow 2% to 3% from the prior year and is projecting 2025 earnings per share between $4.30 and $4.40, at the midpoint, representing a 7% annual increase.
The trajectory is particularly impressive considering what BJ's CEO Robert Eddy describes as an "incredibly dynamic environment" with multiple challenges. Eddy points not only to modest cost pressures from trade tariffs, but also subdued demand for discretionary items against generally lower consumer confidence. Three ongoing strategic levers help explain the company's underlying strength.
First, its "Fresh 2.0" initiative, launched in 2024, has helped overhaul the company's perishable-food sourcing strategy, emphasizing freshness while transforming the club section to look more like a high-end grocer than its former no-frills layout. Management believes the presentation and higher-quality offerings are resonating with members and driving spending.
Second, BJ's has also been successful expanding its private-label offerings. With an effort to match the quality of name brands in both packaged foods and household products, BJ's has secured many of the same manufacturers with white-label agreements. BJ's own brands now comprise 26% of merchandise sales.
Finally, the company's e-commerce business is gaining adoption with digitally-enabled comparable sales up 30% year over year in the last quarter. The platform, which features a mobile app and same-day delivery options, has helped attract a younger and more active membership base, creating a stickier business.
There are risks, of course. The possibility of a decline in comparable sales or weakness in membership growth -- signaling customers are shifting their spending elsewhere -- would undermine any constructive thesis on the stock. BJ's also remains exposed to inflationary pressures impacting margins, with rising costs forcing a reassessment of the earnings outlook.
Competition among big-box retailers, grocers, and club warehouses remains fierce, but BJ's can generate significant investor returns by focusing on its core strengths and dominating in the markets it serves. A rock-solid balance sheet and robust cash flow supporting ongoing stock buybacks should further add to shareholder value.
Ultimately, there's plenty to like about BJ's Wholesale Club as an investment. The stock represents a blend of long-term growth potential with compelling relative value. Its defensive staples profile could be key in the current market environment.
Add this one to your shopping cart in 2026.
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January 23, 2026 21:30 ET (02:30 GMT)
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