BJ's Wholesale Club (NYSE:BJ) has been a big beneficiary of the consumer behavior changes brought on by the pandemic. The warehouse retailer is capitalizing on soaring demand for one-stop shopping trips that allow people to stock up on essential home supplies while splurging on discretionary treats like consumer electronics.

Those favorable industry trends have allowed the regional specialist to outpace even national rivals like Costco (NASDAQ:COST) and Walmart's (NYSE:WMT) Sam's Club. This positive operating story will be put to the test when BJ's announces its latest results on Nov. 19.

With that competitive backdrop in mind, let's look at the trends that could determine whether BJ's stock continues outpacing the market through late 2020.

A woman shopping in the meat section of a grocery store

Image source: Getty Images.

Market-share battles

Market-share gains have been a key factor behind BJ's stock price rally this year. All of its peers have posted record growth during the pandemic, but there's been an unusually wide range of sales gains as consumers flocked into the big-box warehouse shopping niche.

BJ's sales growth has looked strong in the context of its peers, with comps rising 24% in the fiscal second quarter (which ended in early August), compared with Costco's 14% boost through late August. Sam's Club notched a 13% spike through July, too. (These metrics aren't fully comparable, because Costco's reported comps figure adjusts for changes in gas prices, but is being held back by the change in the volume of gas demand since the start of the pandemic. BJ's comps metric excludes the entire impact of gasoline sales.)

BJ's Thursday earnings report will come just after Walmart announces its results, so investors will judge it against the retailing giant's sales metrics. Costco, for its part, has been growing in the U.S. market at a 17% pace in the nine weeks that ended on Nov. 1.

Profitability and cash flow

BJ's improving finances are a key pillar of the investing thesis today. Its profit margin is surging thanks to steady pricing, rising membership fees, and soaring sales. Net income more than doubled in the first half of 2020, to $202 million.

BJ Operating Margin (TTM) Chart

BJ's Operating Margin (TTM), data by YCharts. TTM = trailing twelve months.

The big question going forward is whether that was just a temporary boost driven by pandemic shopping habits. Management has predicted more enduring changes to its business, and we'll get an update on Thursday on how CEO Lee Delaney is seeing that transition play out. BJ's has already reduced its debt burden and spent aggressively on stock repurchases. Another quarter of strong cash flow would give executives more flexibility to direct capital toward these channels or toward bigger growth initiatives.

A bright holiday season ahead?

BJ's might decline to issue an official outlook for 2020 even though there are just a few weeks left in the fiscal year. Risks to short-term growth include further major COVID-19 outbreaks and the ongoing recession

But the latest operating updates by rivals like Costco suggest that industry demand is staying strong into the start of the fourth quarter. That lift could contribute to a positive outlook from Delaney and his team this week.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.