BJ's Land a Buyout Lure

BJ's stock, currently at around $32, has an enterprise value of $2.1 billion, which is 7.4 times trailing twelve-month EBITDA. Costco(COST Quote), the largest U.S. wholesale club operator, has a $53 stock that trades at 9.6 times trailing EBITDA.

BJ's deserves to trade at some sort of discount to Costco because it has posted slower earnings growth in recent years and faces more challenges as the country's third-largest wholesale club operator. Sam's Club, which is owned by Wal-Mart(WMT Quote), is the second-largest discount club.

However, even if you apply a slight discount to the Costco multiple and add to that a bottoms-up analysis of the real estate, you get a big number for BJ's stock value, says one large investor in the stock who spoke on the condition of anonymity. "This makes for the perfect going-private transaction," the investor says.

Another large owner of the stock believes that BJ's is worth at least $38 in an LBO and estimates the real estate is worth about $1 billion.

Real Estate Value Unrealized

According to the company's annual report, BJ's had 165 warehouse club locations as of January, of which 48 are owned and 11 locations are ground leases (where the company owns the building, but leases the underlying land). The remaining stores are leased.

BJ's doesn't specify which specific locations are owned, and a company spokeswoman declined to provide this information.