For Aggressive Investors:
PriceSmart Inc. |  - Co. Spotlights available via RSS feed
| The Costco Of Central America
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This column is for investors willing to take more risk and potentially receive more reward. The stocks mentioned in this column are not recommended to buy or sell. They're brought to your attention so you can investigate them further to determine if they fit your risk profile. Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings. And some will have tremendous stories. | | PSMT | $17.50 | Why It's Featured: Sales and earnings are growing noticeably.
Danger Zones: Volatile stock price. | Forward P/E | 15.7 | | Earn. Growth | 15% | | Projected Sales Growth | 8.1% | | Market Cap. | 516.8M |
May 8, 2009 - PriceSmart Inc. (PSMT-NASDAQ) through its subsidiaries, engages in the ownership and operation of membership shopping warehouse clubs under the trade name PriceSmart in Central America and the Caribbean.
The company's warehouse clubs sell perishable foods and basic consumer goods to individuals and businesses. The warehouse clubs also offers various ancillary services that include food services, bakery, tire centers, and photo centers.
It also operates one warehouse club in Saipan, Micronesia licensed to and operated by local business people. As of August 31, 2008, PriceSmart operated 25 warehouse clubs in 11 countries and 1 U.S. territory. The company was founded in 1994 and is headquartered in San Diego, California.
Think Costco on an international scale, only smaller. Total revenues were
$1.115 billion in 2008. This year analysts see the company doing $1.26 billion. Next year, $1.40 billion. That's well above the $731.2 million the company reported in 2006 (fiscal year ends August 31).
On the earnings side, they're ramping even better. With a deficit in 2005 of $2.19 a share, the company has turned things around dramatically. In 2006, earnings per share (eps) went to 30 cents positive, followed by 56 cents eps in 2007. Last year, they hit $1.30. This year, analysts predict
$1.44. One analyst expects 2010 to show a decrease to $1.11. There are only 2 analysts following the company.
PSMT reported earnings on April 8 for the second quarter. Profits were higher by 34%. They were $12.7 million or 43 cents a share compared to $9.5 million or 33 cents a share in the second period of last year. Sales were up by 14% to $334.8 million. Last year, in the second quarter, they registered $293.8 million.
Same-store warehouse sales for the period ended March 29 climbed 8.5%. Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
Warehouse club operators have benefited from stronger sales during the recession as consumers worried about the economy and unemployment look to trim their shopping costs and get more value for their money by purchasing bulk items typically found at such stores.
The stock price chart wasn't pretty last year. It finished 2007 at an all-time high of $33.67. By October/November of 2008, it traded at $10.35 a share, hit by the same tsunami all stocks felt. The stock has recovered by almost 75% but still well below its high mark. With earnings likely to weaken next year, investors need to keep expectations realistic. However, for the longer term investor, this company has shown it can grow successfully, and when the global economy recovers, it should once again deliver strong profitability.
More numbers: Price to sales is .43. Price to Book is 1.85. Operating margin for the last 12 months was 4.88% while Profit margin was 3.73%. Return on Equity was 17.63%. Total cash is $30 million. Cash per share is $1.01. Total debt is $37.38 million. Current ratio is 1.225. Book Value per share is $9.48. Beta is 1.08. There are 29.58 million shares outstanding and a float of 23.46 million. Insiders own 52.68%. Institutions have 35.3%. There is an annual dividend of 50 cents for a yield of 2.8%.
Dig into this one a little deeper if you'd like to diversify outside the U.S. Management owns a good chunk of the stock and has grown the company successfully, ramping earnings faster than sales. While all economies are still weak, PriceSmart offers goods that are attractively priced. Consumers will keep coming back as they look to stretch their purchasing power.
- Company Web site: www.pricesmart.com - Ted Allrich |
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