Reviewing BJs Wholesale Club (BJ) & Costco Wholesale (COST)

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BJs Wholesale Club (NASDAQ: COST) and Costco Wholesale (NASDAQ:COST) are both consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for BJs Wholesale Club and Costco Wholesale, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BJs Wholesale Club 1 5 7 0 2.46
Costco Wholesale 0 7 19 0 2.73

BJs Wholesale Club currently has a consensus target price of $29.00, suggesting a potential downside of 1.09%. Costco Wholesale has a consensus target price of $211.86, suggesting a potential downside of 8.18%. Given BJs Wholesale Club’s higher possible upside, analysts plainly believe BJs Wholesale Club is more favorable than Costco Wholesale.

Valuation and Earnings

This table compares BJs Wholesale Club and Costco Wholesale’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BJs Wholesale Club N/A N/A N/A N/A N/A
Costco Wholesale $129.03 billion 0.78 $2.68 billion $5.82 39.65

Costco Wholesale has higher revenue and earnings than BJs Wholesale Club.

Dividends

Costco Wholesale pays an annual dividend of $2.28 per share and has a dividend yield of 1.0%. BJs Wholesale Club does not pay a dividend. Costco Wholesale pays out 39.2% of its earnings in the form of a dividend. Costco Wholesale has increased its dividend for 14 consecutive years.

Institutional & Insider Ownership

65.7% of BJs Wholesale Club shares are held by institutional investors. Comparatively, 71.5% of Costco Wholesale shares are held by institutional investors. 0.7% of Costco Wholesale shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares BJs Wholesale Club and Costco Wholesale’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BJs Wholesale Club N/A N/A N/A
Costco Wholesale 2.16% 24.67% 7.52%

Summary

Costco Wholesale beats BJs Wholesale Club on 10 of the 12 factors compared between the two stocks.

BJs Wholesale Club Company Profile

BJ's Wholesale Club Holdings, Inc. operates as a warehouse club on the East Coast of the United States. It offers perishable, edible grocery, general merchandise, and non-edible grocery products. The company also sells electronics, computers, office supplies and equipment, home products, health and beauty aids, sporting goods, outdoor living, baby products, toys, and jewelry through Website. The company offers its products under the trademarks and service marks, such as BJ's Wholesale Club, BJ's, Wellsley Farms, Berkley Jensen, My BJ's Perks, BJ's Easy Renewal, BJ's Gas, BJ's Perks Elite, BJ's Perks Plus, Inner Circle, and BJ's Perks Rewards. As of February 3, 2018, it operated 215 clubs and 133 gasoline stations. The company was formerly known as Beacon Holding Inc. and changed its name to BJ's Wholesale Club Holdings, Inc. in February 2018. The company is based in Westborough, Massachusetts.

Costco Wholesale Company Profile

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories. The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and nonalcoholic beverages, and cleaning supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio products; meat, bakery, deli, and produces; and apparel and small appliances. It also operates gas stations, pharmacies, optical dispensing centers, food courts, and hearing-aid centers; and engages in the travel business. In addition, the company provides gold star individual and business membership services. As of September 3, 2017, it operated 741 membership warehouses, including 514 warehouses in the United States, Washington, District of Columbia, and Puerto Rico, 97 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 in Korea, 13 in Taiwan, 9 in Australia, 2 in Spain, 1 in Iceland, and 1 in France. Further, the company sells its products through online. The company was formerly known as Costco Companies, Inc. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

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