What happened

Shares of Costco Wholesale competitor BJ's Wholesale Club Holdings (BJ -2.15%) jumped 7.6% in afternoon trading Thursday after the company beat analyst projections for its fiscal second-quarter 2022 sales and earnings.

Heading into earnings day, analysts had predicted BJ's would earn just $0.80 per share on sales of $4.6 billion. Instead, BJ's this morning reported an adjusted profit of $1.06 per share -- and sales of $5.1 billion.  

So what

Total sales grew 22% year over year and same-store sales soared nearly 20% at BJ's in Q2, which ended July 30. And granted, skyrocketing prices on gasoline, and BJ's share of those sales, accounted for a lot of this growth. But even same-store sales excluding gas were up 7.6% year over year, and membership fee income grew 11.3%. Clearly, BJ's did well last quarter.  

Profits performed even better than sales. On a non-GAAP (adjusted) basis BJ's easily trumped analyst estimates, but the company's profits under generally accepted accounting principles (GAAP) were nearly as good, rising 29% year over year to $1.03 per share, and growing even faster than sales.

Commenting on the quarter, CEO Bob Eddy noted that BJ's increased its foot traffic in the quarter (as you'd expect, considering that 11% growth in membership fees). The company also apparently gained market share, although it's not yet clear from whom -- whether from rivals like Costco and Sam's Club, or simply from traditional grocery stores.

Now what

Nor did the good news end there. Shifting from its report of tremendous performance in Q2 to its guidance for the rest of this year, management predicted its sales will grow 4% to 5% for this year as a whole (only a little slower than Q2's growth). Profits-wise, management says earnings could be anywhere from $3.50 per share to $3.60 per share -- as much as 10% better than what the company previously predicted.

All that being said, one note of caution might be in order here: Assume BJ's hits at least the low end of that guidance. At $74.50 or so in share price, and $3.50 per share in profit, this would mean that BJ's stock is valued at roughly 21 times current year earnings -- not bad for a stock that just reported earnings growth of 29%. But according to analysts who follow the stock, these good times won't last forever. Over the next five years, average earnings growth is expected to be closer to 7% or 8% annually.

Relative to a 21 price-to-earnings ratio, that means BJ's stock is currently valued as close to a 3 PEG ratio. That's awfully pricey for a retailer -- and for a wholesaler, too. My best advice to investors at this point would therefore be to enjoy today's profits -- and take those profits before everyone else realizes just how expensive BJ's stock is starting to look.