PriceSmart (PSMT) keeps plying its winning strategy as a global membership warehouse chain by rapidly increasing revenues and visibility. So far this year, investors have reaped big profits from this small-cap powerhouse: Its stock climbed 54 percent versus only 8 percent for behemoth Costco (COST).
Modeled on the Costco membership club model, PriceSmart has 28 warehouses throughout Central America and the Caribbean. Business is good. Sales soared 23.6 percent to $421.6 million in the company’s fiscal third quarter compared to $341.2 million a year earlier. Over the past three years, net income rocketed 51.48 percent. Meanwhile, sales for other super center operators were sluggish.
Chalk up stellar gains to crackerjack management. San Diego-based PriceSmart was founded by Sol Price and his son Robert. After launching two other successful businesses, the late Sol Price had already earned the respect of the retail industry.
Not that PriceSmart is worry-free. In 2003, sales plunged and the stock price was hammered under the leadership of a previous chief executive. After that, Robert Price became the interim CEO and sales began to recover.
Few analysts cover PriceSmart. Global Hunter Securities has a buy rating on the stock. According to S&P technical evaluations, PriceSmart gets a bullish rating with average volatility.
Analysts are bullish about PriceSmart’s future too. According to an S&P consensus, earnings per share will grow by 21 percent in 2012. The company reports next in mid-November.
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