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Is PriceSmart (PSMT) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

PriceSmart (PSMT - Free Report) is a stock many investors are watching right now. PSMT is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 15.96. This compares to its industry's average Forward P/E of 28.16. PSMT's Forward P/E has been as high as 17.56 and as low as 15.25, with a median of 16.49, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PSMT has a P/S ratio of 0.52. This compares to its industry's average P/S of 0.88.

Finally, we should also recognize that PSMT has a P/CF ratio of 11.73. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. PSMT's P/CF compares to its industry's average P/CF of 27.15. Over the past 52 weeks, PSMT's P/CF has been as high as 13.56 and as low as 10.59, with a median of 12.41.

Value investors will likely look at more than just these metrics, but the above data helps show that PriceSmart is likely undervalued currently. And when considering the strength of its earnings outlook, PSMT sticks out at as one of the market's strongest value stocks.

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