Unimpressive Comps and Average 3Q Numbers- Pricesmart, Inc. (NASDAQ:PSMT) Gets A Zacks Rating of ‘Strong Sell’

On the last trading day, August 12, 2014, Zacks downgraded the ratings of PriceSmart, Inc. (NASDAQ:PSMT) to a ‘strong sell’ and gave its stocks a #5 rank. The estimates of PriceSmart, Inc. (NASDAQ:PSMT) are falling down ever since the operator of warehouse stores announced weak numbers for its third fiscal quarter. Furthermore, the company’s comps for the month of July that were announced on August 11 were not that remarkable either.

PriceSmart, Inc. (NASDAQ:PSMT) has its stores in around 12 countries including the Caribbean and the Latin American region. However, the company’s corporate operations and distribution units are principally situated in the region of U.S. The company had a total of 33 operational warehouse clubs by the end of July 2014.

Stocks of PriceSmart, Inc. (NASDAQ:PSMT) tumbled down by more than 20 percent, for the company failed to report positive numbers for its third fiscal quarter.

The company missed the third fiscal quarter’s revenue estimate of Zacks and it hardly managed to reach the earnings estimates of Zacks since the comps of PriceSmart, Inc. (NASDAQ:PSMT) were quite unimpressive during the third quarter.

The company’s adjusted earnings were in line with the Zacks estimates; the adjusted earnings were reported to be around 70 cents for the third quarter of the year 2014. The earnings of the company increased by 14.8 percent on the yearly basis as the margins of the company and the gains from the foreign exchange operations improved slightly.

Revenues of PriceSmart, Inc. (NASDAQ:PSMT) increase by 7.6 percent and reached to $615 million. Nonetheless, the figures were far below the Zacks estimates of $626 million.

Coming to the gross profit margin of the company, the margin increased by 34bps, giving rise to a 14.8 percent increase. The operational income of the company increased by 9.5 percent and reached to $31.2 million. Moreover, the operating margin improved by 9bps.

Zacks cut down its 2014 estimates for PriceSmart, Inc. (NASDAQ:PSMT) by 2 percent and its 2015 estimates by 5 percent after PriceSmart, Inc. (NASDAQ:PSMT) announced weak earnings reports.

Coming to the comps of the company, the numbers increased by 2.9 percent during the third fiscal quarter; however, the figures were far less than the figures of 6.7 percent for the first quarter and 7.9 percent for the second quarter. Additionally, the comps growth for the month of June came to a total of 1 percent increase.

On August 11, 2014, the company announced its comps for the month of July. The numbers increased by 1.8 percent; although the figures were better than the numbers of June but they were still weaker than the comps of 2.3 percent for May and 4.6 percent for April. This year, the company failed to report firm numbers for comps.

On the last trading day, August 12, 2014, PriceSmart, Inc. (NASDAQ:PSMT) opened its stocks at a price of $88.33 and closed at a price of $86.94, after hitting the highest numbers of $88.58. The company has a total market capitalization of $2.63 billion with a price to earnings ratio of 28.72. As far as the dividend yield of the company is concerned, it is reported to be around 0.81 percent.