The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how BJ's (NYSE:BJ) and the rest of the large-format grocery & general merchandise retailer stocks fared in Q3.
Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
The 4 large-format grocery & general merchandise retailer stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
BJ's (NYSE:BJ)
Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.
BJ's reported revenues of $5.35 billion, up 4.9% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a beat of analysts’ EPS estimates but a slight miss of analysts’ EBITDA estimates.
“Our business continues to perform well in a volatile environment and we are maintaining an unwavering focus on what matters most: taking care of families who depend on us,” said Bob Eddy, Chairman and Chief Executive Officer, BJ’s Wholesale Club.
Unsurprisingly, the stock is down 1.6% since reporting and currently trades at $89.16.
Is now the time to buy BJ's? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Walmart (NYSE:WMT)
Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.
Walmart reported revenues of $179.5 billion, up 5.8% year on year, outperforming analysts’ expectations by 1.1%. The business had a satisfactory quarter with a decent beat of analysts’ gross margin estimates but full-year EPS guidance meeting analysts’ expectations.
Walmart pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 6.3% since reporting. It currently trades at $107.02.
Is now the time to buy Walmart? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Target (NYSE:TGT)
With a higher focus on style and aesthetics compared to other large general merchandise retailers, Target (NYSE:TGT) serves the suburban consumer who is looking for a wide range of products under one roof.
Target reported revenues of $25.27 billion, down 1.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted full-year EPS guidance beating analysts’ expectations but a significant miss of analysts’ EBITDA estimates.
Target delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 2.7% since the results and currently trades at $86.13.
Read our full analysis of Target’s results here.
Costco (NASDAQ:COST)
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ:COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Costco reported revenues of $86.16 billion, up 8.1% year on year. This result was in line with analysts’ expectations. More broadly, it was a mixed quarter as it also logged an impressive beat of analysts’ gross margin estimates but a slight miss of analysts’ EBITDA estimates.
Costco pulled off the fastest revenue growth among its peers. The stock is down 5.4% since reporting and currently trades at $893.52.
Read our full, actionable report on Costco here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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