PriceSmart Inc (PSMT) stock analysis

P/E above its 5-year median

PriceSmart's P/E of 30.8 is above its own 5-year median of 21.6.

P/E above the industry

PriceSmart's P/E of 30.8 is above the Variety Stores median of 22.5.

EV/EBITDA above its 5-year median

PriceSmart's EV/EBITDA of 13.8 is above its 5-year median of 9.1.

P/B below the industry

PriceSmart's price-to-book of 3.54 is below the Variety Stores median of 5.57.

Trading above fair value

The share price of $166.50 is above our fair value estimate of $124.11.

Margin of safety under 20%

The price is 34.2% above fair value, so there is no margin of safety.

Revenue growing 10%+ a year

Revenue grew 10.0% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 15.6% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 12.6% over the last twelve months, against a 5-year average of 11.2% a year.

Growing faster than the industry

Revenue grew 11.5% over the last twelve months; the Variety Stores median is 9.6%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin improving

Gross margin was 17.7% over the last twelve months, against 17.4% a year earlier.

Return on equity under 15%

Return on equity was 12.3% over the last twelve months and averaged 11.7% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 15.8%, above the 10% that usually covers the cost of capital.

Return on equity below the industry

PriceSmart's return on equity of 12.3% is below the Variety Stores median of 24.9%.

Earnings grew over 5 years

Net income grew 11.2% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 2.8% over the last twelve months, against a 5-year average of 2.7%.

Net margin below the industry

PriceSmart's net margin of 2.8% is below the Variety Stores median of 4.0%.

Low debt

Debt is 11.6% of shareholders' equity, under the 40% we consider low.

Debt falling against equity

Debt to equity fell from 14.1% five years ago to 11.6%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 182% of total debt.

Interest well covered

Operating income covers interest expense 15.6 times.

Short-term assets cover short-term debts

Current assets are 1.24 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 5.98; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

PriceSmart paid dividends worth 0.8% of the share price over the last twelve months.

Yield below Treasuries

The 0.8% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; PriceSmart yields 0.8%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 25.8% of net income.

Covered by free cash flow

Dividends take 44.6% of free cash flow.