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A Smart Quarter For PriceSmart
Discount warehouse operator PriceSmart (Nasdaq:PSMT) reported fiscal 2010 third quarter net revenues of $341 million a 14% increase over the 2009 fiscal third quarter. Net income was $12.0 million, or 40 cents per diluted share, in the third quarter of fiscal 2010 compared to $8.7 million, 29 cents per diluted share, in the third quarter of fiscal 2009.
Developing It's Own Niche
PriceSmart, headquartered in San Diego, owns and operates American-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 27 warehouse clubs in 11 countries and one U.S. territory: five in Costa Rica, four each in Panama and Trinidad, three in Guatemala, two each in Dominican Republic, El Salvador and Honduras, and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands.
The company is a like a smaller international version combining the elements of ultra successful retail club Costco (Nasdaq:COST) and Sam's Club, the retail shopping club owned by Wal-Mart (NYSE:WMT). Members will find everything under one roof at PriceSmart from groceries and fresh produce to electronics and furniture.
Growing Smartly
What we are used to here in the US is still considered revolutionary. In many foreign countries, customers would go to the butcher for meat, the baker for bread and the produce stand for fruits and vegetables. Having everything under one roof is a great opportunity. Over the years, PriceSmart has become the largest club warehouse operator in Central America and the Caribbean. The company serves over 1 million members in 27 locations. Last month the company announced its 28th location will open in Colombia - its first location in the country. The company is still run by co-founder Robert Price.
It's difficult to find direct competitors to PriceSmart. Costco and Sam's Club are focused on the United States. Looking at other U.S. based discount retailers like TJX (NYSE:TJX) and SteinMart (Nasdaq:SMRT) which trade for 13 and 15 times earnings, PriceSmart shares are currently fetching 17 times earnings - in line with the overall market valuations.
Bottom Line
The third quarter was a quality quarter for PriceSmart. Looking ahead, continued expansion in Central America and other international markets should be received warmly and lead to respectable results.
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Developing It's Own Niche
PriceSmart, headquartered in San Diego, owns and operates American-style membership shopping warehouse clubs in Central America and the Caribbean, selling high quality merchandise at low prices to PriceSmart members. PriceSmart now operates 27 warehouse clubs in 11 countries and one U.S. territory: five in Costa Rica, four each in Panama and Trinidad, three in Guatemala, two each in Dominican Republic, El Salvador and Honduras, and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands.
The company is a like a smaller international version combining the elements of ultra successful retail club Costco (Nasdaq:COST) and Sam's Club, the retail shopping club owned by Wal-Mart (NYSE:WMT). Members will find everything under one roof at PriceSmart from groceries and fresh produce to electronics and furniture.
What we are used to here in the US is still considered revolutionary. In many foreign countries, customers would go to the butcher for meat, the baker for bread and the produce stand for fruits and vegetables. Having everything under one roof is a great opportunity. Over the years, PriceSmart has become the largest club warehouse operator in Central America and the Caribbean. The company serves over 1 million members in 27 locations. Last month the company announced its 28th location will open in Colombia - its first location in the country. The company is still run by co-founder Robert Price.
It's difficult to find direct competitors to PriceSmart. Costco and Sam's Club are focused on the United States. Looking at other U.S. based discount retailers like TJX (NYSE:TJX) and SteinMart (Nasdaq:SMRT) which trade for 13 and 15 times earnings, PriceSmart shares are currently fetching 17 times earnings - in line with the overall market valuations.
Bottom Line
The third quarter was a quality quarter for PriceSmart. Looking ahead, continued expansion in Central America and other international markets should be received warmly and lead to respectable results.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Sham Gad
Sham Gad is the Managing Partner of Gad Partners Fund's, value inspired investment partnerships modeled after the Buffett Partnerships of the 1950's. Previously, Gad ran the Gad Investment Group and delivered annualized returns of 22% from 2002 to 2005. Gad is also the author of "The Business of Value Investing" which will be out in the fall of 2009. Gad earned his MBA at the University of Georgia in May of 2007. Gad runs a value investing blog. He can also be reached by visiting the Gad Partners Funds site. When not writing or analyzing businesses, Gad enjoys hanging out with his wife Maggie, reading, golf, and yoga
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