Shares of BJ's Wholesale Club Holdings Inc. (NYSE: BJ) climbed 19% in August, according to data from S&P Global Market Intelligence, on the heels of the warehouse shopping club's recent return to the public stock markets and its second-quarter 2018 report.
For perspective, at the start of last month BJ's had soared nearly 50% since pricing its initial public offering at $17 per share in late June. And it only continued to go modestly higher ahead of its Q2 report. When that report hit the wires on Aug. 28, 2018, the stock jumped nearly 10% to close out the month.
Still, that's not to say BJ's actual results were overwhelmingly strong. Quarterly net sales climbed 4.3% to $3.2 billion, including 2% growth in comparable-club sales excluding gasoline. That translated to a GAAP net loss of $5.6 million, or $0.05 per share -- though BJ's generated net income of $0.31 per share after adjusting for items like IPO costs, recent debt extinguishment, and stock-based compensation. And analysts, on average, were only expecting adjusted earnings of $0.27 per share.
Looking ahead to the full year, BJ's told investors to expect net sales of $12.6 billion to $12.7 billion, assuming comparable-store sales growth of 1.8% to 2.1%. That should translate to 2018 adjusted earnings per share of $1.17 to $1.24.
Keeping in mind the bulk of BJ's Wholesale's IPO proceeds went to paying down debt, we're also talking about a relatively slow-growing business that trades at around 25 times those earnings estimates -- and one with nearly $1.9 billion in long-term debt and only $31 million in cash at the end of the quarter. That's not to say BJ's cash flows can't help it continue to dig out of that hole and expand its presence. But as it stands after its recent rise, I'm content watching BJ's Wholesale's progress from the sidelines.
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