Critical Survey: ARKO (NASDAQ:ARKO) and BJ’s Wholesale Club (NYSE:BJ)

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BJ’s Wholesale Club	$20.50 billion	0.63	$534.42 million	$4.34	22.92
ARKO	$7.84 billion	0.09	$20.84 million	$0.11	57.27

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.

Volatility and Risk

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for BJ’s Wholesale Club and ARKO, as provided by MarketBeat.com.

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

BJ’s Wholesale Club currently has a consensus price target of $107.63, suggesting a potential upside of 8.19%. ARKO has a consensus price target of $7.13, suggesting a potential upside of 13.10%. Given ARKO’s higher probable upside, analysts plainly believe ARKO is more favorable than BJ’s Wholesale Club.

Profitability

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

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

Insider and Institutional Ownership

98.6% of BJ’s Wholesale Club shares are owned by institutional investors. Comparatively, 78.3% of ARKO shares are owned by institutional investors. 1.4% of BJ’s Wholesale Club shares are owned by insiders. Comparatively, 22.5% of ARKO shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

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

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.

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.