Insider Unloading: Michael McCleary Sells $358K Worth Of Pricesmart Shares

Michael McCleary, EVP & CFO at Pricesmart PSMT, disclosed an insider sell on January 22, according to a recent SEC filing.

What Happened: McCleary's decision to sell 4,000 shares of Pricesmart was revealed in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value of the sale is $358,660.

During Thursday's morning session, Pricesmart shares down by 0.0%, currently priced at $90.64.

All You Need to Know About 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 the Caribbean, Costa Rica, Panama, and other regions. The company's revenue consists of net warehouse club sales from merchandise sales, membership income from annual membership fees, export sales, and other income. Its operations consist of four reportable segments; Central America, the Caribbean, Colombia, and the United States. A majority of the company's revenue is derived from Central America.

Unraveling the Financial Story of Pricesmart

Revenue Growth: Pricesmart's revenue growth over a period of 3 months has been noteworthy. As of 31 August, 2024, the company achieved a revenue growth rate of approximately 9.65%. This indicates a substantial increase in the company's top-line earnings. When compared to others in the Consumer Staples sector, the company excelled with a growth rate higher than the average among peers.

Key Insights into Profitability Metrics:

• Gross Margin: The company issues a cost efficiency warning with a low gross margin of 17.28%, indicating potential difficulties in maintaining profitability compared to its peers.

• Earnings per Share (EPS): Pricesmart's EPS is below the industry average. The company faced challenges with a current EPS of 0.95. This suggests a potential decline in earnings.

Debt Management: Pricesmart's debt-to-equity ratio is below the industry average at 0.22, reflecting a lower dependency on debt financing and a more conservative financial approach.

Valuation Analysis:

• Price to Earnings (P/E) Ratio: Pricesmart's P/E ratio of 19.96 is below the industry average, suggesting the stock may be undervalued.

• Price to Sales (P/S) Ratio: The P/S ratio of 0.54 is lower than the industry average, implying a discounted valuation for Pricesmart's stock in relation to sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Indicated by a lower-than-industry-average EV/EBITDA ratio of 9.54, the company suggests a potential undervaluation, which might be advantageous for value-focused investors.

Market Capitalization: With restricted market capitalization, the company is positioned below industry averages. This reflects a smaller scale relative to peers.

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Why Insider Transactions Are Key in Investment Decisions

While insider transactions should not be the sole basis for making investment decisions, they can play a significant role in an investor's decision-making process.

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

Notably, when a company insider makes a new purchase, it is considered an indicator of their positive expectations for the stock.

Conversely, insider sells may not necessarily signal a bearish stance on the stock and can be motivated by various factors.

A Closer Look at Important Transaction Codes

Delving into transactions, investors typically prioritize those unfolding in the open market, as precisely outlined in Table I of the Form 4 filing. A P in Box 3 indicates 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.

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