Instructions: Please use the link below to obtain data for PAPER ASSISTANCE: htt
ID: 2471136 • Letter: I
Question
Instructions: Please use the link below to obtain data for PAPER ASSISTANCE:
http://www.sec.gov/Archives/edgar/data/1037461/000119312511079572/d10k.htm
Introduction/Background - provides a brief description of the company, history, and sets up the current year's information Key statistics such as stock price trends, key ratios, key investments or expansion in the last 3-5 years. Analysis of decisions made by the company, best selling products, and other key items of interest to an investor over the last 3 years. Summary - including your recommendation to a room full of investors on whether they should invest in the company and WHY!
Explanation / Answer
Brief description of company and its hostory: The company is BJ's Wholesale Club. It operates in the business of warehouse club and it started its operations in New England in 1984. After its launch, it has become one of the leading warehouse club operator's in the eastern USA.
Current year's information: The year in question is the fiscal year ended January 29, 2011. For the year ended 2010, the company had 189 clubs in operations, compared to 187 clubs last year. Net sales stood at $10,632,947,000 for the current year, compared to $9,820,912,000 last year. This represents a 8.3% year on on year increase in sales. In terms of bottomline, the net income for the current year stood at 95,036,000. The last year's net income stood at 131,271,000. The fall in net income happened due to loss from discontinued operations in the 2011 fiscal. Ignoring this loss, growth in net income remained flat.
Stock price trends:
Key ratios for fiscal year 2011:
(i)P/E ratio = Market price per share/earnings per share
EPS from continuing operations = 2.36 for year ended 2011. Share price = $42 (for end of January 2011). Thus P/E = 42/2.36 = 17.80
(ii) Net margin = net income/net sales
= 95036/10632947 = 0.90%
Ratio for last 3 years:
Current ratio = current assets/current liabilities
= 1292212/987013 = 1.31
Ratio for last 2 years:
Analysis of decisions made by the company: The best selling products are items like foods, clothing, health and beauty products. Its products in the cleaning supplies category is also quite popular.
The company invested in opening 7 new clubs in 2010. In 2009 it opened 7 new clubs and in 2008 it had opened 4 new clubs. The company says that opening new clubs is very important to drive future growth.
Summary: As per the situation of fiscal 2011, the investment in the company should be made. Its revenue is increasing on a consistent basis. For the current fiscal, same store sales increased by 4.4%, after a decline of 1.9% last year. The merchandise margins are improving every year. The company has plans to further expand the chain in the future. Investments will be made in technology, renovations and club payroll. All these measures will help the company to consolidate its position in the market.
2011 Fiscal 2010 Fiscal Quarter High Low High Low 1 $39.85 $33.59 $34.81 $27.26 2 $47.51 $36.19 $39.59 $31.06 3 $46.43 $40.31 $37.97 $29.73 4 $48.88 $40.74 $37.33 $31.85