The Q3 2014 earnings report for PriceSmart, Inc (NASDAQ: PSMT), a Latin America and the Caribbean membership shopping warehouse club like US based Costco Wholesale Corporation (NASDAQ: COST) and Sam's Club which is owned by Wal-Mart Stores, Inc (NYSE: WMT), is scheduled for after the market closes on Thursday. Aside from the PriceSmart, Inc earnings report, it should be said that Costco Wholesale Corporation reported Q3 2014 earnings on May 29nd (revenues and profits rose but the latter still missed expectations) while Wal-Mart Stores, Inc reported Q1 2015 earnings on May 15th (results were a disappointment and the company blamed the weather along with taxes). However, it should be noted that there are rumors that Costco, with about 650 stores in the US and overseas, might be interested in buying PriceSmart given the latter's footprint in Latin America and the Caribbean.
What Should You Watch Out for With the PriceSmart, Inc Earnings Report?First, here is a quick recap of PriceSmart, Inc's recent earnings history from Yahoo! Finance:
| EPS Est | 0.64 | 0.66 | 0.74 | 0.88 |
| EPS Actual | 0.61 | 0.69 | 0.71 | 0.93 |
| Difference | -0.03 | 0.03 | -0.03 | 0.05 |
| Surprise % | -4.70% | 4.50% | -4.10% | 5.70% |
Last April, PriceSmart, Inc reported results for the second quarter fiscal year 2014 (which ended on February 28, 2014). Net warehouse club sales increased 11.0% to $657.2 million and total revenues were $674.4 million compared to $607.4 million for the same period last year. For the four weeks ended March 30, 2014, comparable net warehouse club sales for the 30 warehouse clubs open at least 13 1/2 full months increased 1.9% while for the thirty-week period ended March 30, 2014, comparable net warehouse club sales increased 6.5%. Net income came in at $28.3 million verses $24.9 million.
However, PriceSmart, Inc's revenues and comparable sales missed analyst expectations – leading to concerns about whether growth can sustain the stock's valuation. This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenue of $621.94 million and EPS $0.69 - lower than the EPS of $0.70 expected sixty days ago and the EPS of $0.74 expected ninety days ago. Given the last miss though, expectations are probably low this time around.
On the news front, PriceSmart, Inc was upgraded by Roth Capital to a Buy with the latter citing the pullback in shares. Roth also raised its price target to $108 from $105.
In early May, PriceSmart, Inc opened its third warehouse club in Honduras (its second warehouse club in Tegucigalpa), bringing to 33 the total number of warehouse clubs in operation. The company anticipates some sales will transfer to this new warehouse club from the existing location in the same manner that some sales shifted when upon the opening of new warehouse clubs in close proximity to existing clubs in Colombia and Costa Rica.
What do the PriceSmart, Inc Charts Say?The latest technical chart for PriceSmart, Inc shows shares peaking at the end of last year and then heading downward except for a bump in March:
Over the long term, PriceSmart, Inc has really outperformed both Costco Wholesale Corporation and Wal-Mart Stores, Inc albeit that performance sort of leveled off near the end of 2011:
A technical chart for Costco Wholesale Corporation shows the stock trending slightly upward since February after spiking at the end of last year while Wal-Mart Stores has been bouncing around but also trending upward since February:
As with any membership retailer like Costco Wholesale Corporation and Sam's Club, PriceSmart, Inc needs to show that revenue and member income is growing and that customers are satisfied by keeping their membership cards. Add that to the fact that the company operates in Latin American and the Caribbean, who's economies feel any headwinds or tailwinds coming from up north, and you have an earnings report and earnings call worth paying attention to.
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