For Immediate Release
Chicago, IL – November 26, 2021 – Zacks Equity Research shares BJ’s Wholesale Club BJ as the Bull of the Day, and AstraZeneca AZN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Motors GM, Goodyear GT, and Genuine Parts GPC.
Here is a synopsis of all five stocks:
Bull of the Day:
BJ’s Wholesale Club is a membership-only retail club chain that operates primarily on the East Coast, as well as in Ohio and Michigan. BJ’s offers members a variety of name-brand products at discount wholesale prices across many categories like grocery, household, pet, toys, and more.
Q3 Earnings Recap
BJ’s revenue grew 14.3% year-over-year to $4.26 billion; actual product sales increased 14.4% while membership fees rose 7.7% over the prior-year period. “Membership size and quality continue to improve; first-year renewal rates remain at historic levels,” said BJ’s in the earnings press release.
Earnings came in at $0.92 per share, showing healthy improvement over Q3 2020 and easily beating Wall Street’s projections of $0.81 per share.
Comparable store sales (excluding gasoline sales) gained an impressive 5.7%, with digital sales spiking 44% year-over-year.
Cash flow remains strong too. Net cash provided by operating activities hit $173.9 million and free cash flow was $99.2 million for the quarter. BJ’s board also authorized a $500 million share repurchase program.
Notably, supply chain challenges weren’t too much of a factor for BJ’s in Q3. Gross profit margin did drop by 0.2 percentage points, but the wholesaler was able to offset that slump by selling more high-margin products like consumer electronics.
BJ Breaks Out
Year-to-date, shares of BJ have soared over 81%, which is above the S&P 500’s 25.2% increase. Earnings estimates have been rising too, and BJ is a Zacks Rank #1 (Strong Buy) as of this writing.
For fiscal 2021, seven analysts have revised their bottom-line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 26 cents to $3.18 per share. Earnings are expected to grow about 3% compared to the prior year period. Fiscal 2022 looks strong too; seven analysts have upped their outlook and our consensus estimate has climbed 30 cents to $3.46 per share.
Looking ahead, BJ’s management declined to offer guidance for the holiday quarter, citing “[continued] external factors and uncertainties in the market.”
But its improving membership renewal rates is a great sign as BJ’s looks to finish 2021 on a strong note and continue to expand its footprint. The market share BJ’s gained throughout the pandemic is a good sign that there’s still growing demand for wholesale retail.
If you’re an investor searching for a retail sector stock to add to your portfolio, make sure to keep BJ on your shortlist.
Bear of the Day:
Headquartered in London, AstraZeneca is one of the largest biopharmaceutical companies in the world, focusing on metabolic disease, cardiovascular, respiratory, immunology, and oncology therapeutics. The company recently acquired rare disease drugmaker Alexion for $39 billion; the deal added five marketed products to AZN’s pipeline.
Q3 Earnings Disappoint Wall Street
Shares of AZN slipped nearly 7% after the company reported third-quarter results a couple of weeks ago.
AstraZeneca’s revenue jumped 50% year-over-year to $9.9 billion, easily surpassing the consensus estimate of $9.4 billion. However, AZN posted a hefty loss of $1.10 per share on the bottom line due to significantly higher expenses related to the Alexion acquisition. Analysts were looking for earnings of $1.28 per share on average.
But, the Alexion purchase is already adding to top-line growth. Sales have been increasing for Ultomiris and Strensiq, which treat Paroxysmal Nocturnal Hemoglobinuria (PNH) and perinatal/infantile- and juvenile-onset hypophosphatasia (HPP), respectively, and have offset declines in the rare-disease drug Soliris.
AstraZeneca’s product lineup continues to demonstrate positive momentum, despite the earnings miss last quarter. In particular, its oncology franchise—this includes drugs like Tagrisso and Imfinzi—delivered solid growth.
AZN is now a Zacks Rank #5 (Strong Sell).
Four analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen five cents to $2.62 per share. Wall Street has lowered its earnings picture for 2022 as well, but the bottom line is expected to post double-digit year-over-year growth.
Shares have been on a bumpy ride so far in 2021. Year-to-date, AZN is up only 12.7% compared to the S&P 500’s gain of 25.2%.
Looking ahead, AstraZeneca expects total revenue, excluding its Covid-19 vaccine, to grow by a “low-twenties percentage” for fiscal 2021, remaining in-line with prior-guidance. EPS is expected to increase to a range of $5.05 to $5.40 per share.
AZN also announced that it will begin selling its Covid-19 vaccine for a profit after promising not to do so during the pandemic. This, along with a potential Emergency Use Authorization for its preventative coronavirus antibody shot AZD7442 (known as Evusheld) and potential U.S. and European approval for its asthma drug tezepelumab, could help catalyze AZN and send shares higher.
GM Buys 25% Stake in Pure WaterCraft
General Motorshas acquired a 25% stake in Pure Watercraft, a startup making electric outboard motors and batteries for boats. The move takes the valuation of the startup to $600 million.
Per the deal, worth $150 million, General Motors will be Seattle-based Pure Watercraft’s components supplier. It will also co-develop new products and provide engineering, design and manufacturing expertise to aid the company in establishing new factories.
General Motors is optimistic that its present footing in deploying technology across rail, truck and aerospace industries, along with the collaboration with Pure Watercraft, will effectively contribute toward zero-emission marine products.
In another development in its EV development efforts, General Motors will start delivering its GMC Hummer electric pickup truck in December. The starting price is above $100,000, and it plans to add subsequent models with higher EV driving ranges and lower starting prices in 2023. The Hummer EV will join the class of electric pickup made by Rivian Automotive Inc. available in the market.
Zacks Rank & Key Picks
General Motors currently carries a Zacks Rank #3 (Hold).
Better-ranked peers in the same space include Goodyear, flaunting a Zacks Rank #1 (Strong Buy), and Genuine Parts, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Goodyear has an expected earnings growth rate of 197% for the current year. The Zacks Consensus Estimate for earnings for the current year has been revised 77% upward over the last 60 days.
Goodyear beat the Zacks Consensus Estimate for earnings in all the four trailing quarters. The company pulled off a trailing four-quarter earnings surprise of roughly 228.5%, on average. Its shares have also gained around 103.5% over a year.
Genuine Parts has an expected earnings growth rate of 27.3% for the current year. The Zacks Consensus Estimate for the current year has been revised around 5% upward over the past 60 days.
Genuine Parts beat the Zacks Consensus Estimate for earnings in all the four trailing quarters. The company delivered a trailing four-quarter earnings surprise of roughly 16%, on average. Its shares have rallied around 39.3% over a year.
Fox Factory has an expected earnings growth rate of 48.2% for the current year. The Zacks Consensus Estimate for the current year has been revised 2% upward over the past 60 days.
Fox Factory beat the Zacks Consensus Estimate for earnings in all the four trailing quarters. The company pulled off a trailing four-quarter earnings surprise of roughly 16%, on average. Its shares have also rallied around 108.3% over a year.
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AstraZeneca PLC (AZN): Free Stock Analysis Report
Genuine Parts Company (GPC): Free Stock Analysis Report
The Goodyear Tire & Rubber Company (GT): Free Stock Analysis Report
BJ’s Wholesale Club Holdings, Inc. (BJ): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
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