Critical Analysis: Target (TGT) & BJs Wholesale Club (BJ)

Target (NYSE:TGT) and BJs Wholesale Club (NYSE:BJ) are both retail/wholesale companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, valuation, profitability, dividends and institutional ownership.

Earnings and Valuation

This table compares Target and BJs Wholesale Club’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Target $71.88 billion 0.64 $2.93 billion $4.71 18.58
BJs Wholesale Club N/A N/A N/A N/A N/A

Target has higher revenue and earnings than BJs Wholesale Club.

Dividends

Target pays an annual dividend of $2.56 per share and has a dividend yield of 2.9%. BJs Wholesale Club does not pay a dividend. Target pays out 54.4% of its earnings in the form of a dividend. Target has increased its dividend for 50 consecutive years.

Analyst Ratings

This is a summary of current ratings for Target and BJs Wholesale Club, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Target 1 14 6 0 2.24
BJs Wholesale Club 1 5 8 0 2.50

Target currently has a consensus price target of $87.94, suggesting a potential upside of 0.49%. BJs Wholesale Club has a consensus price target of $30.17, suggesting a potential upside of 15.54%. Given BJs Wholesale Club’s stronger consensus rating and higher possible upside, analysts clearly believe BJs Wholesale Club is more favorable than Target.

Insider and Institutional Ownership

83.5% of Target shares are owned by institutional investors. Comparatively, 65.8% of BJs Wholesale Club shares are owned by institutional investors. 0.2% of Target shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Target 4.19% 24.29% 6.92%
BJs Wholesale Club N/A N/A N/A

Summary

Target beats BJs Wholesale Club on 8 of the 12 factors compared between the two stocks.

About Target

Target Corporation operates as a general merchandise retailer in the United States. The company offers beauty and household essentials, including beauty products, personal and baby care products, cleaning products, paper products, and pet supplies; food and beverage products, such as dry grocery, dairy, frozen food, beverage, candy, snacks, deli, bakery, meat, and produce products; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes. It also provides home furnishings and décor comprising furniture, lighting, kitchenware, small appliances, home décor, bed and bath products, home improvement products, and automotive products, as well as seasonal merchandise comprising patio furniture and holiday décor; and music, movies, books, computer software, sporting goods, and toys, as well as electronics that include video game hardware and software. In addition, the company offers in-store amenities, which comprise Target Café, Target Optical, Starbucks, and other food service offerings. It sells its products through its stores; and digital channels, including Target.com. As of March 8, 2018, the company operated 1,826 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

About BJs Wholesale Club

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.

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