Critical Review: BJ’s Wholesale Club (NYSE:BJ) & ARKO (NASDAQ:ARKO)

ARKO (NASDAQ:ARKO) and BJ’s Wholesale Club (NYSE:BJ) are both consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ARKO	0.24%	6.95%	0.52%
BJ’s Wholesale Club	2.72%	28.66%	7.99%

Valuation and Earnings

This table compares ARKO and BJ’s Wholesale Club”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARKO	$8.73 billion	0.08	$20.84 million	$0.11	58.55
BJ’s Wholesale Club	$20.50 billion	0.64	$534.42 million	$4.34	23.10

BJ’s Wholesale Club has higher revenue and earnings than ARKO. BJ’s Wholesale Club is trading at a lower price-to-earnings ratio than ARKO, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

ARKO has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, BJ’s Wholesale Club has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for ARKO and BJ’s Wholesale Club, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARKO	1	3	1	1	2.33
BJ’s Wholesale Club	1	11	8	0	2.35

ARKO currently has a consensus price target of $7.13, indicating a potential upside of 10.64%. BJ’s Wholesale Club has a consensus price target of $107.63, indicating a potential upside of 7.34%. Given ARKO’s higher possible upside, equities research analysts plainly believe ARKO is more favorable than BJ’s Wholesale Club.

Institutional and Insider Ownership

78.3% of ARKO shares are owned by institutional investors. Comparatively, 98.6% of BJ’s Wholesale Club shares are owned by institutional investors. 22.5% of ARKO shares are owned by insiders. Comparatively, 1.4% of BJ’s Wholesale Club shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

BJ’s Wholesale Club beats ARKO on 10 of the 15 factors compared between the two stocks.

About ARKO

Arko Corp. operates convenience stores in the United States. It operates through Retail, Wholesale, Fleet Fueling, and GPMP segments. The Retail segment engages in the sale of fuel and merchandise to retail consumers. Its Wholesale segment supplies fuel to third-party dealers and consignment agents. The Fleet Fueling segment supplies fuel to proprietary and third-party cardlock, and issuance of proprietary fuel cards. Its GPMP segment supplies fuel to retail and wholesale segments. The company is based in Richmond, Virginia.

About BJ’s Wholesale Club

BJ’s Wholesale Club Holdings, Inc. engages in the operation of membership warehouse clubs. Its product categories include grocery, household and pet, television and electronics, furniture, computer and tablets, patio and outdoor living, lawn and garden, baby and kids, toys, home, health and beauty, appliances, and jewelry. The company was founded in 1984 and is headquartered in Marlborough, MA.