Is PSMT a smart buy at its current price?
PriceSmart, Inc. (NASDAQ:PSMT) is one of the largest owners and operators of U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean. PSMT also recently entered the South American region with clubs in Colombia, now serving over three million cardholders. The retailer operates 50 warehouse clubs in 12 countries and one U.S. territory, with plans for new warehouse club operations in Jamaica and Colombia underway.
PriceSmart stock has shed 2.1% this year, and 21.1% year-over-year. the security looks to have found its footing near the $70 mark, though the 40-day moving average continues to loom overhead as resistance. The retail stock also offers a dividend yield of 1.18% with a forward dividend of $0.86.
Short-term options traders remain call-biased. This is per PSMT's Schaeffer's put/call open interest ratio (SOIR) of 0.28, which sits higher than just 16% of readings from the past year.
PSMT has produced 20.6% revenue growth and 41.6% net income growth since fiscal 2018. Currently, its trailing 12-month revenues and net income are up 5.5% and 6.1%, respectively, since fiscal 2021. Estimates suggest the retailer will end fiscal 2022 with 9.8% revenue growth and 12.3% earnings growth. PriceSmart is also expected to increase its revenues 6.4% and earnings 10.4% for fiscal 2023, indicating a decent growth rate.
Nonetheless, PriceSmart stock's valuation remains slightly high relative to the level of top and bottom line growth it has produced in recent years, and is expected to generate in coming years. PSMT currently trades at a price-earnings ratio of 21.14 and a price-sales ratio of 0.57.
In general, investors are best suited waiting for a better entry point, with the $60 range being the ideal point for value investors to consider buying. This price range would place PriceSmart’s forward price-earnings ratio somewhere around 16.00.