Sell Alert: Francisco Velasco Cashes Out $112K In Pricesmart Stock

Francisco Velasco, EVP at Pricesmart PSMT, executed a substantial insider sell on July 18, according to an SEC filing.

What Happened: Velasco's recent move involves selling 1,298 shares of Pricesmart. This information is documented in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday. The total value is $112,926.

The latest market snapshot at Thursday morning reveals Pricesmart shares down by 0.71%, trading at $89.93.

Unveiling the Story Behind Pricesmart

Pricesmart Inc is principally engaged in operating U.S.-style membership shopping warehouse clubs that offer consumer goods at low prices. The company is headquartered in San Diego, California, United States, and operates stores in Latin America and the Caribbean, with Central America contributing over half of its net warehouse club sales. The company's revenue consists of net warehouse club sales from merchandise sales, membership income from annual membership fees, export sales, and other income, with net warehouse club sales accounting for the majority of the company's total revenue.

Understanding the Numbers: Pricesmart's Finances

Revenue Growth: Over the 3 months period, Pricesmart showcased positive performance, achieving a revenue growth rate of 12.11% as of 31 May, 2024. This reflects a substantial increase in the company's top-line earnings. As compared to its peers, the company achieved a growth rate higher than the average among peers in Consumer Staples sector.

Holistic Profitability Examination:

• Gross Margin: With a low gross margin of 17.06%, the company exhibits below-average profitability, signaling potential struggles in cost efficiency compared to its industry peers.

• Earnings per Share (EPS): Pricesmart's EPS outshines the industry average, indicating a strong bottom-line trend with a current EPS of 1.08.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 0.24.

Assessing Valuation Metrics:

• Price to Earnings (P/E) Ratio: The current P/E ratio of 22.04 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 0.57, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio lower than industry benchmarks at 9.91, Pricesmart presents an attractive value opportunity.

Market Capitalization Analysis: Positioned below industry benchmarks, the company's market capitalization faces constraints in size. This could be influenced by factors such as growth expectations or operational capacity.

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Why Pay Attention to Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

Within the legal framework, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

Essential Transaction Codes Unveiled

Navigating through the landscape of transactions, investors often prioritize those unfolding in the open market, precisely detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Pricesmart's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.