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Bear of the Day: PriceSmart (PSMT)

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Founded in 1994 and headquartered in San Diego, CA, PriceSmart (PSMT - Free Report) is the largest operator of membership warehouse clubs in Central America and the Caribbean. It has recently entered the South American region with clubs in Colombia.

The company operates 40 warehouse clubs in 12 countries and one U.S. territory.

Disappointing Quarterly Results

The company reported quarterly earnings of 61 cents a share, missing the Zacks Consensus Estimate of 69 cents. Cost of goods sold and SG&A expenses went up during the quarter.

This was the fourth miss for the company in the trailing five quarters. Total revenues were however up 7.1% and ahead of estimates.

Shares plunged almost 8% in the after-market trading. Also, the company reported soft comparable warehouse sales performance for the month of June, further worrying investors about its outlook.

Estimates Slashed

Analysts have slashed their estimates significantly after poor results. Zacks Consensus Estimates for the current and next year are down to $3.01 per share and $3.20 per share respectively, down from $3.20 and $3.67, before the results.

The Bottom Line

Shares of this warehouse operator are down more than 10% this year but the outlook remains cloudy with consecutive misses and soft comps. The industry rank is in the bottom 20% and increases the likelihood of continued underpeformance.

 

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