PriceSmart Inc. - Growth & Income

PriceSmart Inc (PSMT) recently reported earnings per share growth of 38% from the same period in 2009. Same-store sales increased 10.6%.

Shares recently reached a 52-week high of $29.08.

Company Description

PriceSmart is a membership warehouse club operating 27 stores in Central America and the Caribbean. It is based in San Diego, California and has a market cap of $858 million.

Earnings Beat by 18%

PriceSmart reported earnings per share of $0.40, beating the Zacks Consensus Estimate of $0.34 by 18%. Earnings per share was $0.29 in the same quarter of 2009.

Total revenues increased 14% year-over-year. In addition to double-digit same-store sales growth, the membership renewal rate was approximately 85%. Total memberships increased 8.1%.

Operating income increased 36.5% as the margin expanded from 4.3% to 5.2%.

Outlook

The Zacks Consensus Estimate for 2010 is $1.56, compared with $1.45 in 2009. Analysts are expecting earnings per share of $1.70 in 2011, representing 9% annual growth.

PriceSmart announces sales results after each month. The company has seen strong sales growth so far this quarter:

It appears the American-style model of warehouse club membership is exportable to Central America and the Caribbean.

Valuation

Shares are trading at 2.7x book value, in-line with the industry average. Its trailing PE ratio of 18.5 is a slight premium to the peer group multiple of 16.5. It is also trading at 17.0x forward earnings.

PriceSmart has a dividend yield of 1.7% with a comfortable payout ratio of 32%. It is a Zacks #2 Rank (buy) stock.

The Chart

Shares have reached a new 52-week high as PriceSmart continues to grow same-store sales at double-digit rates.

 
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