BJ's Wholesale Club Holdings, Inc. (BJ) stock intrinsic value fair value estimate & owner earnings analysis

BJ's Wholesale Club runs 263 membership warehouse clubs (as of January 31, 2026), selling groceries, general merchandise and gasoline to paying members. Its results come from two streams: merchandise and gas sales ($21.0 billion in fiscal 2025) and membership fees ($499.8 million, up 9.5%). Membership fees have grown every year for over 25 years, and the membership renewal rate is 90%. That fee stream, plus repeat shopping by members, is the structural core of the business. How we measure earnings. We count the cash the business generates from operations, remove one-off swings in working capital (inventory, payables, accrued taxes), subtract stock compensation as a real cost, and subtract the capital spending needed to keep the club base running. Because BJ's has been building clubs quickly, almost all of its spending is deducted, and we credit new-club growth only at the historical pace. On this basis, earnings per diluted share were about $1.43 (fiscal 2018), $1.32, $3.06, $2.33, $2.95, $2.26, $1.84 and $1.52 (fiscal 2025). The pandemic years of 2020 and 2022 were unusually strong, and fiscal 2025 was pulled down mainly by capital spending rising to $702 million, up $114 million, as the company builds new clubs and distribution capacity. Cash from operations, before working capital, actually rose about 7% in fiscal 2025. Fiscal 2025 working capital also flattered cash flow, partly because accrued sales and other taxes rose by roughly $87 million; we removed that. We treated fiscal 2018 (the year of the July 2018 IPO) as the start of the current business. Starting level. We use $1.84 per share, the median of the last three fiscal years, which covers the period of heavy club building and is not lifted by pandemic conditions. This is above the latest year's $1.52, which fell 17% from $1.84. We assume no growth in year 1 because thirteen clubs and thirteen net gas stations opened in fiscal 2025 and are still maturing; that maturation is our only dated reason for not extending the decline. If capital spending stays at this elevated level without a matching earnings gain, the base case is too high. Base case (about $37 per share). Earnings grow about 3% a year for five years, the pace at which the club count has grown (217 clubs in fiscal 2019 to 263 in fiscal 2025) through the pandemic and funded from the company's own cash flow, then slow to 2%, 1.5% and 1% as sites become harder to add, and stay flat after year 10 on the strength of the existing clubs and the long membership record. We give no credit for share gains, new products or margin improvement. Merchandise comparable sales rose 2.6% in fiscal 2025 and total comparable sales 1.0%. Bear case (about $25 per share). Earnings stay at the latest $1.52 with no growth and no benefit from the new clubs, because capital spending remains at its current share of sales. The filing points to real pressures: tariffs on imported goods that may not be passed to customers, and possible reductions in food-assistance (SNAP) benefits or rules, which could reduce club sales. Leverage is moderate: about $519 million of borrowings plus long-term operating leases of about $1.9 billion, which are already reflected in cash flow as rent. Bull case (about $49 per share). Earnings recover to $2.26, the level reached in fiscal 2023 when capital spending was lower relative to sales, as the recently opened clubs mature and the build-out pace eases, then grow 4% for five years, 3% for three years and 2% for two years. This depends on the company's own club pipeline, not on any market recovery. What would make this wrong. Higher-than-expected capital spending with no earnings payoff, a squeeze on merchandise margins, a drop in membership renewals below the current 90%, or a change to SNAP. Prior-year figures were restated in the latest filing only in presentation; we could not reconcile every cash-flow line to the earlier filings in detail, and we used each year's own statement of cash flows.