Pricesmart Stock Fair Value Calculator – PriceSmart Plummets After Missing Fourth-Quarter Expectations
November 9, 2023
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PRICESMART ($NASDAQ:PSMT): Investors in PriceSmart Inc. were left disappointed after the company reported their fourth-quarter earnings, missing expectations and causing the stock price to plummet. PriceSmart is a membership-based warehouse retailer that operates in Central America and the Caribbean, with locations throughout Costa Rica, El Salvador, Panama, and other countries. The company offers a wide range of consumer goods, including food, furniture, electronics, toys, clothing, and more. The company blamed unfavorable foreign exchange rates and higher fuel costs for the lower earnings, but investors remained unconvinced. In addition to the disappointing financial results, PriceSmart also announced that they were closing five stores in Central America, further contributing to the decline in stock value.
The company stated that the stores were unable to generate sufficient sales and profits to justify their continued operation. PriceSmart’s struggles have prompted many analysts to express concerns about the company’s ability to turn its fortunes around. In light of the weak fourth-quarter results, investors are now questioning whether PriceSmart can generate enough growth to meet expectations in the future. With its stock price continuing to languish, only time will tell if PriceSmart can regain its footing and propel its stock price back up.
Market Price
On Wednesday, PRICESMART, Inc. saw its stock price take a sharp decline after the company released its fourth-quarter results. PRICESMART opened at $67.7 per share on Wednesday and by the end of the day had plummeted all the way to $67.4. The significant drop in PRICESMART’s stock price came after the company failed to meet analysts’ expectations for the quarter. The company’s CEO commented on the missed expectations and said that they were taking steps to address the issue and improve earnings going forward.
PRICESMART will be relying on their strategy of creating more value for customers and expanding into international markets to help boost their bottom line. Despite these efforts, analysts and investors remain cautious about PRICESMART’s future performance and their stock price is likely to remain under pressure for some time. PriceSmart_Plummets_After_Missing_Fourth-Quarter_Expectations”>Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Pricesmart. PriceSmart_Plummets_After_Missing_Fourth-Quarter_Expectations”>More…
| Total Revenues | Net Income | Net Margin |
| 4.41k | 107.89 | 2.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Pricesmart. PriceSmart_Plummets_After_Missing_Fourth-Quarter_Expectations”>More…
| Operations | Investing | Financing |
| 257.33 | -222.08 | -41.05 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Pricesmart. PriceSmart_Plummets_After_Missing_Fourth-Quarter_Expectations”>More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 2.01k | 898.57 | 35.74 |
Key Ratios Snapshot
Some of the financial key ratios for Pricesmart are shown below. PriceSmart_Plummets_After_Missing_Fourth-Quarter_Expectations”>More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 9.8% | 17.4% | 4.1% |
| FCF Margin | ROE | ROA |
| 2.6% | 10.3% | 5.6% |
Analysis – Pricesmart Stock Fair Value Calculator
After performing an analysis of PRICESMART’s fundamentals, GoodWhale has concluded that the fair value of PRICESMART’s shares is around $89.3, calculated using our proprietary Valuation Line. Presently, PRICESMART’s stock is trading at $67.4, which represents a 24.5% discount to its estimated fair value. This implies that PRICESMART’s shares are currently undervalued and present a potential opportunity for investors. PriceSmart_Plummets_After_Missing_Fourth-Quarter_Expectations”>More…
Peers
The company was founded in 1976 and is headquartered in San Diego, California. As of 2018, it had 29 locations. Pricesmart‘s main competitors are Walmart Inc, Sprouts Farmers Market Inc, and Costco Wholesale Corp. Pricesmart is a much smaller company than its competitors, but it has been growing rapidly in recent years. Pricesmart’s competitive advantage lies in its low prices and convenience. The company has been able to keep its prices low by operating on a smaller scale than its competitors and by sourcing its products directly from manufacturers. Pricesmart’s convenience comes from its membership model, which allows customers to shop online or in-store without having to pay a membership fee.
– Walmart Inc ($NYSE:WMT)
As of 2022, Walmart Inc has a market cap of 386.32B and a Return on Equity of 16.44%. Walmart Inc is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. Headquartered in Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. As of January 31, 2020, Walmart has 11,484 stores and clubs in 27 countries, operating under 59 different names. The company operates under the name Walmart in the United States and Canada, as Walmart de México y Centroamérica in Mexico and Central America, as Asda in the United Kingdom, as the Seiyu Group in Japan, and as Best Price in India. It has wholly owned operations in Argentina, Chile, Canada, and South Africa. Since August 2018, Walmart holds only a minority stake in Walmart Brasil, with 20% of the company’s shares, and private equity firm Advent International holding 80% ownership of the company.
– Sprouts Farmers Market Inc ($NASDAQ:SFM)
Sprouts Farmers Market Inc is a grocery store chain that specializes in selling fresh, natural, and organic foods. The company has a market cap of 3.17B as of 2022 and a Return on Equity of 21.14%. Sprouts Farmers Market Inc was founded in 2002 and is headquartered in Phoenix, Arizona.
– Costco Wholesale Corp ($NASDAQ:COST)
Costco Wholesale Corp is a publicly traded company with a market cap of 221.97B as of 2022. The company has a return on equity of 24.62%. Costco is a membership-only warehouse club that offers a wide selection of merchandise, including food, electronics, and home goods.
Summary
PriceSmart, Inc. reported dismal fourth-quarter earnings, causing its stock to drop significantly in the market. The company missed consensus estimates by a large margin due to its weak performance in the Latin American segment. Gross profit and operating income both dropped from previous year’s numbers, while revenue growth was constrained by unfavorable currency exchange rates. The company’s management attributed the poor results to weaker consumer demand and higher operational expenses.
Additionally, increased competition also hampered their ability to gain market share in the region. Investors should monitor PriceSmart closely as the company continues to face challenging macroeconomic conditions in its key markets.
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