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PSMT

PriceSmart NasdaqGS:PSMT Stock Report

Last Price

US$60.65

Market Cap

US$1.9b

7D

4.5%

1Y

-22.7%

Updated

04 Oct, 2022

Data

Company Financials +
PSMT fundamental analysis
Snowflake Score
Valuation1/6
Future Growth1/6
Past Performance2/6
Financial Health6/6
Dividends3/6

PSMT Stock Overview

PriceSmart, Inc. owns and operates U.S. style membership shopping warehouse clubs in the United States, Central America, the Caribbean, and Colombia.

PriceSmart, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for PriceSmart
Historical stock prices
Current Share PriceUS$60.65
52 Week HighUS$88.30
52 Week LowUS$57.37
Beta0.71
1 Month Change-1.67%
3 Month Change-15.85%
1 Year Change-22.73%
3 Year Change-10.15%
5 Year Change-31.70%
Change since IPO366.54%

Recent News & Updates

Aug 14

PriceSmart: Slowly Looking Smarter

PriceSmart has seen disappointing growth and margin developments in recent years. The price club has seen tougher trends and faces near term headwinds from inflation and supply chain disruptions. While valuations have come down amidst modest growth and a pullback in the share price, I see no screaming appeal at a current market multiple. In the spring of 2017, I concluded that investors in PriceSmart (PSMT) should be smart and hold off on the shares. The company has been lagging compared to its much larger peer Costco (COST) as growth has come down quite a bit after years of double-digit comparable sales growth amidst a strong dollar and difficult conditions in Columbia at the time. I noted that the company is well positioned to maintain and build out a dominant position in Central America, yet valuations were still a bit demanding, as political risks are above average of course. Thesis Founded in 1996, PriceSmart was founded by Sol Price, who previously founded FedMart and Price Club, the latter of which actually merged with Costco in the 1990s. Headquartered in San Diego, the company has grown to operate 39 big box clubs in Central America (back in 2017), located in 13 countries. The company had 1.5 million members, on average paying $35 annual member fee. After a run higher in the 2000s, the company had to undergo a painful restructuring as shares fell to just $5 in 2004. Ever since then, the company has seen very steady growth with double-digit growth seen year over year, albeit the relative strong dollar always was a matter of attention. In 2017, the company saw shares trade at $87 per share, equivalent to roughly 28 times earnings, and with revenues reported at $3.0 billion, the sales multiple came in at 0.8 times revenues. These were demanding multiples, on the back of the solid growth reported in recent years and a strong net cash position of $50 million, despite the continuation of opening of new stores. Further growth in comparable sales growth was needed as a small increase in margins could reveal upside in earnings to $4 per share, yet even in that case valuations were quite high, as the risk-reward in the high-eighties simply was not that compelling. Soft Results In the five years since my last take on PriceSmart, it is very evident that investors have seen disappointments as shares actually fell back to the $60 mark in 2019 amidst political issues in Central America. Shares rallied to the $100 mark again in 2021 amidst the pent-up demand following the pandemic, but ever since then it has been all downhill again with shares now trading at $65 per share. Fast forwarding from the 2017 base, we see that PriceSmart has seen modest growth over the past couple of years, with sales up nearly 9% that year to $3.6 billion. Growth has been relatively modest in the period 2017-2020. Operating earnings of $158 million translated into margins of 4.4% and have never been able to come back to the 5% mark. This modest margin pressure made that net earnings for the year came in at $98 million, with earnings posted at $3.18 per share, marking hardly any progress from 2017. In the meantime, net cash balances have risen to $125 million, up to more than $4 per share. With shares trading at around the $70 mark at the time, the multiple (after backing out net cash) has come down from a high twenty times multiple to 20 times, as the recent performance in recent years, simply has not been up to standard. Productivity of the stores is an issue as the company reported a store count of 49, up 10 from 2017, as revenues per store have really not advanced over the past couple of years, something which pressured margins of course. In January, PriceSmart posted an 11% increase in first quarter sales (driven by some store openings in recent times) with earnings rising accordingly. In April, second quarter results revealed another 11% sales growth amidst inflationary pressures as the company actually saw earnings growth in line with the topline results. By July, third quarter results rose 15% which looks very comforting, but is mostly the result of strong inflation as currency headwinds only detracted just over 2% of the reported sales. The problem is that third quarter results actually showed a decline in absolute earnings with operating margins down to the low 3%. This made that quarterly earnings fell eleven cents to $0.62 per share, albeit earnings are flattish so far in the first three quarters of the year, with earnings set to trend at $3.25 per share here for the year. At the same time, net cash is down to $80 million following investments and working capital changes, still marking a decent cash position of nearly $3 per share. With shares now trading at $65, the operating asset valuation comes in at $62 per share, as the earnings multiples have fallen to roughly 20 times. Concluding Remarks The truth is that PriceSmart has been hit by years of softer growth and declining margins, after it was a hugely successful franchise in the 2000s and earlier part of the 2010s. By now the company has grown to 50 stores and a run rate of $4 billion in sales, yet the issue is that the company in the long term is simply seeing more competitive pressures, and in the near term is hit hard by a strong dollar, inflationary pressures and supply chains issues.

Aug 07
Capital Allocation Trends At PriceSmart (NASDAQ:PSMT) Aren't Ideal

Capital Allocation Trends At PriceSmart (NASDAQ:PSMT) Aren't Ideal

If you're looking for a multi-bagger, there's a few things to keep an eye out for. One common approach is to try and...

Jul 20
PriceSmart (NASDAQ:PSMT) Is Paying Out A Larger Dividend Than Last Year

PriceSmart (NASDAQ:PSMT) Is Paying Out A Larger Dividend Than Last Year

The board of PriceSmart, Inc. ( NASDAQ:PSMT ) has announced that it will be paying its dividend of $0.43 on the 31st of...

Shareholder Returns

PSMTUS Consumer RetailingUS Market
7D4.5%0.08%1.0%
1Y-22.7%-1.7%-20.0%

Return vs Industry: PSMT underperformed the US Consumer Retailing industry which returned -1.7% over the past year.

Return vs Market: PSMT underperformed the US Market which returned -20% over the past year.

Price Volatility

Is PSMT's price volatile compared to industry and market?
PSMT volatility
PSMT Average Weekly Movement4.2%
Consumer Retailing Industry Average Movement4.4%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: PSMT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: PSMT's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
199410,000Sherry Bahrambeyguihttps://www.pricesmart.com

PriceSmart, Inc. owns and operates U.S. style membership shopping warehouse clubs in the United States, Central America, the Caribbean, and Colombia. Its warehouse clubs sell brand name and private label consumer products, essential goods, fresh produce, prepared foods, and fresh-baked goods, as well as provides services, such as optical, tire center, and other ancillary services. The company also operates Click & Go, an e-commerce platform for online ordering, curbside pickup, and delivery services.

PriceSmart, Inc. Fundamentals Summary

How do PriceSmart's earnings and revenue compare to its market cap?
PSMT fundamental statistics
Market CapUS$1.85b
Earnings (TTM)US$99.49m
Revenue (TTM)US$3.95b

18.6x

P/E Ratio

0.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PSMT income statement (TTM)
RevenueUS$3.95b
Cost of RevenueUS$3.29b
Gross ProfitUS$669.33m
Other ExpensesUS$569.83m
EarningsUS$99.49m

Last Reported Earnings

May 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.26
Gross Margin16.93%
Net Profit Margin2.52%
Debt/Equity Ratio16.4%

How did PSMT perform over the long term?

See historical performance and comparison

Dividends

1.4%

Current Dividend Yield

24%

Payout Ratio