Pricesmart (PSMT) AI Stock Analysis

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Pricesmart

(NASDAQ:PSMT)

Rating:79Outperform

Price Target:

$119.00

▲(10.73%Upside)

Pricesmart presents a strong financial foundation with consistent growth in revenue and profitability. Positive technical indicators and strategic leadership changes contribute to a favorable outlook. However, caution is advised due to potential challenges like decreased gross margins and increased expenses.

Pricesmart (PSMT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$3.31B

Dividend Yield1.17%

Average Volume (3M)173.88K

Price to Earnings (P/E)23.0

Beta (1Y)0.44

Revenue Growth8.65%

EPS Growth17.76%

CountryUS

Employees12,000

SectorConsumer Defensive

Sector Strength69

IndustryDiscount Stores

Share Statistics

EPS (TTM)1.45

Shares Outstanding30,754,145

10 Day Avg. Volume178,165

30 Day Avg. Volume173,877

Financial Highlights & Ratios

PEG Ratio5.82

Price to Book (P/B)2.21

Price to Sales (P/S)0.00

P/FCF Ratio21.29

Enterprise Value/Market Cap0.60

Enterprise Value/Revenue0.10

Enterprise Value/Gross Profit1.03

Enterprise Value/Ebitda1.67

Forecast

1Y Price Target

$100.00

Price Target Upside-6.95% Downside

Rating ConsensusHold

Number of Analyst Covering1

Pricesmart Business Overview & Revenue Model

Company DescriptionPriceSmart, 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. As of March 29, 2022, it operated 49 warehouse clubs in 12 countries and one U.S. territory. PriceSmart, Inc. was incorporated in 1994 and is headquartered in San Diego, California.

How the Company Makes MoneyPriceSmart makes money primarily through the sale of goods and services to its membership base. The company operates on a membership fee model, where consumers pay an annual fee to gain access to its warehouse stores. This membership fee provides a stable source of revenue independent of sales. Additionally, PriceSmart generates revenue through the direct sale of products within its warehouse clubs, leveraging bulk purchasing and efficient supply chain management to offer competitive prices. The company also benefits from partnerships with local suppliers and international brands to diversify its product offerings, further enhancing its revenue streams.

Pricesmart Earnings Call Summary

Earnings Call Date:Apr 09, 2025

(Q2-2025)

% Change Since: 25.27%|

Next Earnings Date:Jul 10, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a strong performance in terms of revenue growth, membership expansion, and digital sales. However, concerns were raised over decreased gross margins, increased SG&A expenses, and potential impacts from global tariff challenges. The company's strategic investments in infrastructure and technology are expected to address some of these challenges.

Q2-2025 Updates

Positive Updates

Solid Revenue Growth

Net merchandise sales reached over $1.3 billion in Q2 and total revenue was almost $1.4 billion. For the first half, net merchandise sales were nearly $2.6 billion with total revenue exceeding $2.6 billion. Merchandise sales increased by 5.8% or 7% in constant currency.

Strong Regional Performance

In Colombia, net merchandise sales increased by 6.6% or 16% in constant currency. The Caribbean region saw a 6.4% increase or 8.6% in constant currency.

Membership Growth

Membership accounts grew by 4.1% to over 1.9 million accounts with a 12-month renewal rate of 87%. Platinum membership increased significantly from 9.6% to 14.5% of total membership.

Digital Sales Expansion

Net merchandise sales through digital channels increased by 19.3%, reaching a record high of $76.2 million or 5.7% of total net merchandise sales.

Efficient Cash Flow and Investments

Net cash used in investing activities decreased by $25.8 million, and there was a decrease in property and equipment expenditures by $40.7 million.

Effective Tax Rate Reduction

The effective tax rate decreased to 27.2% from 30.5% a year ago due to tax optimization initiatives.

Negative Updates

Decreased Gross Margin

Total gross margins decreased by 10 basis points to 15.6% versus 15.7% in the prior year.

Increased SG&A Expenses

SG&A expenses increased to 12.4% of total revenues compared to 12.2% the previous year, primarily due to planned technology investments.

Tariff Challenges

Ongoing tariff challenges with potential cost pressures due to new US baseline tariffs and reciprocal tariffs from other countries.

Inventory and Cash Conversion Issues

Average inventory per club increased by approximately 9.4%, and inventory days on hand increased by approximately 3.1%.

Company Guidance

During the PriceSmart, Inc. earnings call for the second quarter of fiscal year 2025, several key metrics were highlighted. Net merchandise sales for the quarter reached over $1.3 billion with total revenue nearing $1.4 billion. The company experienced a net merchandise sales growth of 5.8% or 7% in constant currency, while comparable net merchandise sales increased by 6.7% or 7.9% in constant currency. Membership accounts grew by 4.1% to over 1.9 million, with a 12-month renewal rate of 87%. The second quarter also saw a gross margin decrease of 10 basis points to 15.6%, though in dollar terms, total gross margin rose by $10 million, or 5%. Operating income for the quarter increased by 2.6% to $65.3 million, and the effective tax rate dropped to 27.2% from 30.5% a year ago. Adjusted EBITDA reached $87 million, up from $84.1 million in the previous year. Finally, the company is focused on store expansion, with plans to open a new club in Guatemala, and is actively enhancing its supply chain and digital capabilities to support future growth.

Pricesmart Financial Statement Overview

Summary

Pricesmart's financial performance is strong, with consistent revenue growth and improved profitability margins. The company's balance sheet is robust, with effective leverage management and efficient cash flow generation. Despite minor fluctuations in free cash flow, the overall financial health remains solid.

Income Statement

Very Positive

Pricesmart has demonstrated consistent revenue growth with a substantial increase from $3.62 billion in 2021 to $5.08 billion in TTM (Trailing-Twelve-Months). Gross profit margin has improved significantly, indicating better cost management. Net profit margin has been stable, reflecting consistent profitability. The EBIT and EBITDA margins show healthy operational efficiency, with a noticeable rise in EBIT margin over the years.

Balance Sheet

Positive

The company's balance sheet reveals a solid equity base with a consistent increase in stockholders' equity, providing a stable financial foundation. The debt-to-equity ratio has decreased, indicating better leverage management. The equity ratio remains robust, highlighting the company’s good asset financing structure. Return on equity has been stable, reflecting efficient use of shareholder funds.

Cash Flow

Positive

Operating cash flow has been strong, consistently covering net income, showing the company’s operations are generating sufficient cash. Free cash flow has fluctuated but remains positive, indicating prudent capital expenditure management. The operating cash flow to net income ratio is healthy, suggesting efficient cash generation relative to earnings.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
5.08B	4.91B	4.41B	4.07B	3.62B	3.33B
	Gross Profit
1.91B	846.92M	759.33M	681.15M	644.53M	554.41M
	EBIT
223.02M	220.94M	184.52M	99.43M	90.44M	62.88M
	EBITDA
296.92M	297.00M	278.25M	235.94M	223.80M	183.94M
	Net Income Common Stockholders
142.75M	138.88M	109.20M	104.53M	97.96M	78.11M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
247.30M	225.53M	331.06M	248.87M	252.29M	345.99M
	Total Assets
2.09B	2.02B	2.01B	1.81B	1.71B	1.66B
	Total Debt
236.18M	249.63M	278.18M	273.87M	267.29M	329.96M
	Net Debt
105.82M	124.26M	38.19M	36.16M	65.23M	30.48M
	Total Liabilities
920.08M	899.73M	898.57M	817.33M	789.58M	824.09M
	Stockholders Equity
1.17B	1.12B	1.11B	991.07M	915.35M	831.72M
Cash Flow		Free Cash Flow
78.43M	39.04M	114.82M	1.17M	13.99M	158.95M
	Operating Cash Flow
206.31M	207.59M	257.33M	121.83M	127.17M	259.27M
	Investing Cash Flow
-149.69M	-175.45M	-222.08M	-74.76M	-116.72M	-131.21M
	Financing Cash Flow
-98.41M	-150.03M	-41.05M	-12.21M	-95.14M	75.56M

Pricesmart Technical Analysis

Technical Analysis Sentiment

Positive

Last Price107.47

Price Trends

50DMA

100.37

Positive

100DMA

94.54

Positive

200DMA

92.18

Positive

Market Momentum

MACD

1.99

Positive

RSI

60.55

Neutral

STOCH

57.11

Neutral

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 107.47 is above the 20-day moving average (MA) of 106.52, above the 50-day MA of 100.37, and above the 200-day MA of 92.18, indicating a bullish trend. The MACD of 1.99 indicates Positive momentum. The RSI at 60.55 is Neutral, neither overbought nor oversold. The STOCH value of 57.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PSMT.

Pricesmart Risk Analysis

Pricesmart disclosed 28 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

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PSMT	79 Outperform	$3.31B	22.97	12.42%	1.17%	8.65%	17.76%
DG	77 Outperform	$24.48B	21.22	15.69%	2.12%	4.77%	-23.73%
OLLI	75 Outperform	$6.93B	34.48	12.32%	―	8.70%	2.54%
BJ	70 Outperform	$14.42B	25.28	32.76%	―	2.84%	11.25%
KR	69 Neutral	$43.57B	17.81	26.59%	1.98%	-1.94%	23.94%
Sector *	65 Neutral	$8.88B	15.01	4.67%	6.15%	3.61%	-2.60%
DLTR	58 Neutral	$19.43B	―	19.25%	―	-20.46%	-202.26%

* Consumer Defensive Sector Average

Performance Comparison

PSMT

Pricesmart

107.47

29.32

37.52%

Dollar General

111.84

-9.90

-8.13%

DLTR

Dollar Tree

96.09

-10.44

-9.80%

Kroger Company

65.06

15.60

31.54%

OLLI

Ollie's Bargain Outlet Holding

114.21

28.81

33.74%

Bj's Wholesale Club Holdings

109.66

21.50

24.39%

Pricesmart Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

PriceSmart Appoints New CFO Amid Leadership Transition

Positive

May 9, 2025

PriceSmart announced the appointment of Gualberto Hernandez as Executive Vice President and Chief Financial Officer, effective June 1, 2025, following the resignation of Michael McCleary, who will continue as an Executive Vice President until September 30, 2025, and then provide consulting support. Hernandez, with a strong background in finance and strategy from his tenure at Estée Lauder and Sephora, is expected to bring valuable expertise to PriceSmart. The transition is part of a broader strategy to maintain growth and operational efficiency, with McCleary expressing confidence in the company’s future under new leadership.

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.