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Pricesmart (PSMT)
NASDAQ:PSMT
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Pricesmart
(NASDAQ:PSMT)
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Rating:75Outperform
Price Target:
$150.00
▲(22.97% Upside)
The score is driven primarily by solid financial fundamentals (steady growth and low leverage) and strong technical uptrend signals. This is balanced by less attractive valuation (higher P/E and low yield) and financial variability risks (margin pressure and uneven free cash flow), while the latest earnings call was broadly supportive with manageable near-term headwinds.
Positive Factors
Membership revenue and retention
A high renewal rate and rising premium (Platinum) membership mix strengthen recurring revenue and predictability. Membership fees provide stable, low-volatility income that supports margins and funds expansion, lessening reliance on merchandise cycles and improving long-term cash flow visibility.
Conservative balance sheet and low leverage
Low and improving leverage with growing equity provides financial flexibility for store/DC expansion and technology investment. A conservative balance sheet reduces refinancing risk in emerging markets and supports sustained capex without overly pressuring interest coverage or liquidity.
Supply-chain and tech rollouts to improve margins
Investments in forecasting, replenishment systems and regional distribution centers are structural initiatives to cut lead times, lower landed costs and reduce stockouts. Better inventory flow and availability can sustainably raise gross margins and merchandise turns over multi-period horizons.
Negative Factors
Gross-margin compression
A meaningful drop in gross margin materially constrains earnings given already thin net margins (~2.8%). If the compression persists, it will limit reinvestment capacity, reduce ROI on new clubs/DCs, and pressure operating leverage even if revenues grow modestly.
Uneven free cash flow conversion
Volatile FCF conversion signals working-capital swings and higher reinvestment needs, reducing predictable internal funding for expansion and dividends. This raises reliance on external capital for club openings and DC projects, increasing execution and financing risk over the medium term.
Foreign-exchange and local currency liquidity risk
Material local-currency cash balances and recurring FX losses highlight currency convertibility and repatriation constraints across operating markets. These structural exposures can erode reported results, limit centralized liquidity for capital projects, and complicate cash management across jurisdictions.
Pricesmart (PSMT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.94B
Dividend Yield1.02%
Average Volume (3M)184.49K
Price to Earnings (P/E)27.2
Beta (1Y)0.56
Revenue Growth7.25%
EPS Growth5.42%
CountryUS
Employees12,000
SectorConsumer Defensive
Sector Strength42
IndustryDiscount Stores
Share Statistics
EPS (TTM)1.29
Shares Outstanding30,815,416
10 Day Avg. Volume248,893
30 Day Avg. Volume184,493
Financial Highlights & Ratios
PEG Ratio3.98
Price to Book (P/B)2.58
Price to Sales (P/S)0.61
P/FCF Ratio31.25
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue0.68
Enterprise Value/Gross Profit3.92
Enterprise Value/Ebitda11.66
Forecast
1Y Price Target
$134.50Price Target Upside10.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Pricesmart Business Overview & Revenue Model
Company DescriptionPriceSmart, Inc. operates membership-based warehouse clubs in Central America and the Caribbean. Founded in 1997 and headquartered in San Diego, California, the company provides a broad range of products including groceries, electronics, home goods, and apparel at discounted prices. PriceSmart primarily serves the middle-income markets in its regions, offering a shopping experience that emphasizes bulk purchasing and value for its members.
How the Company Makes MoneyPriceSmart generates revenue primarily through membership fees and sales of merchandise. Customers pay an annual membership fee to gain access to the warehouse clubs, which creates a steady stream of income. The company then sells a variety of products, including food, household items, and electronics, often at lower prices than traditional retailers due to its bulk purchasing model. Additionally, PriceSmart benefits from private label products, which typically have higher margins. The company's strategic partnerships with suppliers and manufacturers also enhance its ability to offer competitive pricing while maintaining profitability. Seasonal promotions and limited-time offers further drive sales and increase customer traffic, contributing to its overall earnings.
Pricesmart Earnings Call Summary
Earnings Call Date:Jan 07, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Apr 15, 2026
Earnings Call Sentiment Positive
The call conveyed a predominately positive operational and financial picture: solid top-line growth, strong comparable sales, notable regional outperformance (especially Colombia), meaningful membership and digital progress, margin stability and improved operating profit and adjusted EBITDA. Management also outlined an active capital and supply-chain investment program (new clubs, distribution centers, technology). The principal negatives were transitory operational disruptions during the holiday period (elections, weather and supply-chain out-of-stocks), modest SG&A and tax headwinds, foreign currency losses and increased investing cash use. Overall, the positives — including robust sales, membership momentum and margin resilience — outweigh the manageable near-term challenges and monitored macro risks.Q1-2026 Updates
Positive Updates
Strong Top-Line Growth
Net merchandise sales and total revenue reached almost $1.4 billion; net merchandise sales increased 10.6% year-over-year (9.5% in constant currency). Comparable net merchandise sales increased 8.0% (6.9% in constant currency).
Improving Transaction Dynamics
Average sales ticket grew 2.1% and transactions increased 8.4% year-over-year; average price per item rose 1.8% while items per basket remained relatively flat.
Regional Outperformance — Colombia
Colombia delivered exceptional growth with net merchandise sales up 27.8% (15.0% in constant currency) and comparable net merchandise sales up 27.9% (14.7% in constant currency), contributing ~320 basis points to consolidated comparable growth.
Regional Strength — Central America and Caribbean
Central America net merchandise sales increased 9.6% (9.2% cc) with comps +5.4% (5.1% cc) contributing ~320 bps to consolidated comps; Caribbean net merchandise sales increased 5.7% (7.8% cc) with comps +5.6% (7.7% cc) contributing ~160 bps.
Category Growth
Food sales grew ~11.3%, non-foods ~7.2%, food service & bakery ~10.1%, and health services (optical/audiology/pharmacy) ~17.8% year-over-year.
Membership Progress and Monetization
Membership accounts grew 6.7% year-over-year to over 2 million; 12-month renewal rate 89.3%. Platinum (premium) accounts increased to 19.3% of base from 14% a year ago, and membership income as a percent of revenue rose to 1.7% from 1.6%.
Digital Channel Momentum
Digital channel sales reached $89.8 million, up 29.4% year-over-year and representing 6.6% of net merchandise sales. Website/app orders grew 18.1% with average transaction value up 10.1%. 73% of members have an online profile and 27.1% have purchased online.
Supply Chain & Distribution Advances
Panama facility adapted for cold merchandise; new distribution center began operations in Guatemala; plans to open DCs in Trinidad, Colombia and the Dominican Republic; third-party consolidation in China underway; RELEX and e2open implementations progressing to improve inventory and trade management.
Financial and Profitability Improvements
Operating income increased 8% to $62.9 million; net income rose to $40.2 million ($1.29 diluted EPS) from $37.4 million ($1.21); adjusted EBITDA was $86.9 million, up 9.8% year-over-year. Gross margin as a percent of net merchandise sales remained steady at 15.9% and total revenue margin improved 30 basis points to 17.7%.
Cash Flow and Liquidity
Ended quarter with $249.6 million cash and cash equivalents plus ~$114.2 million short-term investments. Net cash provided by operating activities was $71.2 million, up $32.7 million year-over-year.
Real Estate Expansion Pipeline
Purchased land for new clubs: La Romana (Dominican Republic), Montego Bay and South Camp Road (Jamaica), and Ciudad Quesada (Costa Rica). Plan to open four new clubs in FY2026 to reach ~60 clubs and progressing on entry into Chile with two prospective sites and a hired country GM.
Technology & Operational Upgrades
Completed ELERA point-of-sale roll-out in English-speaking Caribbean; migrating mobile app to native iOS/Android; initiating Workday HCM — all intended to improve member and employee experience and operational efficiency.
Negative Updates
Holiday/December Softening and Transitory Disruptions
Comparable net merchandise sales for the 9-week period ended Dec 28 grew 7.1% in USD (5.4% in constant currency), a deceleration versus the quarter. December was negatively impacted by Honduras election-related uncertainty, Panama's extended rainy season affecting traffic/logistics, and supply chain timing issues that caused out-of-stocks in several high-volume food items.
Foreign Currency and Other Expense Pressure
Recorded $7.2 million net loss in total other expense primarily due to foreign currency-related losses, similar to prior year ($7.3 million).
SG&A and Investment-Related Margin Pressure
Total SG&A increased to 13.1% of total revenues from 12.8% (30 basis points), driven by continued technology investments and CEO compensation adjustments.
Higher Effective Tax Rate
Effective tax rate rose to 27.9% from 26.5% a year ago, driven by nonrecurring items including tax contingency approval and foreign exchange fluctuations.
Private Label Reporting Anomaly
Private label sales represented 27% of total merchandise sales, down 70 basis points year-over-year due to a reclassification of the produce category; management noted that on a comparable basis private label penetration would have increased by 70 basis points.
Increased Investing Cash Use
Net cash used in investing activities increased by $61 million year-over-year, reflecting higher purchases of short-term and long-term investments and a $10.4 million increase in property and equipment to support real estate growth.
Local Currency Liquidity Limitation
Approximately $80.2 million of cash, cash equivalents and short-term investments were denominated in local currency in Trinidad and not readily convertible to U.S. dollars, reflecting local FX availability constraints and cash fluctuations.
Weather and Natural-Disaster Related Operational Impact
Hurricane Melissa caused operational disruptions in Jamaica and prompted adjustments to club opening timelines (though management does not anticipate further delays); Panama's rainy season also affected operations.
Geopolitical and Macro Risks Being Monitored
Management is monitoring remittance flow changes to the region and unfolding events in Venezuela; while no impact has been observed to date, these remain potential downside risks.
Company Guidance
Management's guidance focused on execution and timelines for fiscal 2026: they expect to complete the RELEX forecasting/replenishment implementation in FY2026, advance e2open rollouts, open distribution centers in Trinidad, Colombia and the Dominican Republic in FY2026, and continue POS, Workday and native mobile app rollouts while opening four new clubs (La Romana DR — 5 acres, spring 2026; Montego Bay JA — 5 acres, fall 2026; South Camp Rd JA — 3 acres, winter 2026; Ciudad Quesada CR — 6 acres, fall 2026) to bring the total to 60 clubs; Q1 metrics underpinning the plan included nearly $1.4 billion of net merchandise sales (+10.6% / +9.5% cc), comparable net merchandise sales +8.0% (+6.9% cc), average ticket +2.1%, transactions +8.4%, average price per item +1.8%, foods +11.3%, non-foods +7.2%, food service & bakery +10.1% and health services +17.8%, digital sales $89.8M (+29.4%, 6.6% of NMS), membership +6.7% to >2.0M with 12‑month renewal rate 89.3% and Platinum at 19.3% (from 14%), private label ~27% penetration, gross margin 15.9% of NMS, total revenue margin 17.7% (+30 bps), SG&A 13.1% of revenue, operating income $62.9M, adjusted EBITDA $86.9M (+9.8% YoY), net income $40.2M ($1.29 diluted), and cash, cash equivalents and short‑term investments of roughly $363.8M — all framed as drivers to improve product availability, reduce lead times and lower landed costs.Pricesmart Financial Statement Overview
Summary
Steady multi-year revenue growth and a conservative, improving leverage profile support the score, with healthy ROE. Offsetting factors include thin profitability, notable TTM gross-margin compression versus FY2025, and historically uneven free-cash-flow conversion despite improvement in the latest period.Income Statement
Revenue has grown steadily over the last several years (from ~$3.62B in 2021 to $5.27B in FY2025, and $5.39B in TTM (Trailing-Twelve-Months)), supporting a positive growth narrative. Profitability is consistent but thin: net margin is ~2.8% in both FY2025 and TTM, while operating profitability (EBITDA margin ~5–6%) is stable. A key watch item is margin pressure in TTM (gross margin down to ~12.9% vs ~17.4% in FY2025), which could limit earnings upside if it persists despite modest revenue growth in TTM.Balance Sheet
The balance sheet looks conservative with low leverage and improving debt positioning: debt-to-equity is ~0.14 in TTM (Trailing-Twelve-Months), down from ~0.26 in FY2025. Equity has grown over time (from ~$915M in 2021 to ~$1.30B in TTM), and returns on equity are healthy and steady around ~12% in FY2024–TTM. The main limitation is that assets have expanded alongside the business, so maintaining returns will depend on sustaining margins and operating efficiency.Cash Flow
Cash generation is solid in absolute terms, with operating cash flow improving to ~$294M in TTM (Trailing-Twelve-Months) and free cash flow rising to ~$125M (up ~21.6%). However, cash conversion is somewhat uneven: free cash flow is less than half of net income in TTM (about ~43%), signaling reinvestment needs and/or working-capital swings. The multi-year pattern shows volatility (very weak free cash flow in FY2022 and FY2024), which is a risk factor even though the latest period is stronger.| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.27B | 4.91B | 4.41B | 4.07B | 3.62B |
| Gross Profit | 914.37M | 846.92M | 758.57M | 679.53M | 642.13M |
| EBITDA | 306.17M | 297.00M | 252.93M | 233.90M | 219.38M |
| Net Income | 144.90M | 137.12M | 107.89M | 103.29M | 96.68M |
Balance Sheet | |||||
| Total Assets | 2.27B | 2.02B | 2.01B | 1.81B | 1.71B |
| Cash, Cash Equivalents and Short-Term Investments | 325.27M | 225.53M | 331.06M | 248.87M | 252.29M |
| Total Debt | 329.06M | 249.63M | 278.18M | 281.36M | 267.29M |
| Total Liabilities | 1.02B | 899.73M | 898.57M | 817.33M | 789.58M |
| Stockholders Equity | 1.25B | 1.12B | 1.11B | 991.07M | 915.35M |
Cash Flow | |||||
| Free Cash Flow | 103.17M | 39.04M | 114.82M | 1.17M | 13.99M |
| Operating Cash Flow | 261.31M | 207.59M | 257.33M | 121.83M | 127.17M |
| Investing Cash Flow | -128.88M | -175.45M | -222.08M | -74.76M | -116.72M |
| Financing Cash Flow | 14.20M | -150.03M | -41.05M | -12.21M | -95.14M |
Pricesmart Technical Analysis
Positive
121.98
Price Trends
122.60
Positive
119.57
Positive
110.77
Positive
Market Momentum
1.32
Negative
69.50
Neutral
81.31
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PSMT, the sentiment is Positive. The current price of 121.98 is below the 20-day moving average (MA) of 126.24, below the 50-day MA of 122.60, and above the 200-day MA of 110.77, indicating a bullish trend. The MACD of 1.32 indicates Negative momentum. The RSI at 69.50 is Neutral, neither overbought nor oversold. The STOCH value of 81.31 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PSMT.
Pricesmart Risk Analysis
Pricesmart disclosed 30 risk factors in its most recent earnings report. Pricesmart reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Pricesmart Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $898.40B | 39.66 | 24.87% | 0.85% | 4.34% | 17.27% | |
75 Outperform | $3.94B | 27.24 | 12.22% | 1.02% | 7.25% | 5.42% | |
73 Outperform | $31.59B | 24.86 | 16.45% | 1.88% | 4.86% | -4.51% | |
72 Outperform | $391.75B | 49.03 | 30.32% | 0.59% | 8.34% | 9.58% | |
71 Outperform | $11.54B | 20.79 | 29.24% | ― | 2.82% | 3.77% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
61 Neutral | $26.16B | ― | 20.07% | ― | -39.27% | -182.36% |
* Consumer Defensive Sector Average
PSMT
Pricesmart
133.43
45.29
51.38%
COST
Costco
915.31
-16.77
-1.80%
DG
Dollar General
144.00
73.93
105.49%
DLTR
Dollar Tree
131.61
58.71
80.53%
WMT
Walmart
113.07
20.95
22.74%
BJ
Bj's Wholesale Club Holdings
90.21
-6.36
-6.59%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.