PriceSmart (PSMT) earnings release for the 3rd quarter of their 2021 fiscal year
Category: PriceSmart (PSMT)
Date: 13 July 2021 Stock Price of PriceSmart: $90.67 Market Capital of PriceSmart (PSMT): $2.8 billion We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Price Smart, a membership warehouse shopping group that operates 45 warehouses across 12 countries. For the quarter the group reported net sales of $857.5 million and net income of $22.5 million
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Sherry S. Bahrambeygui, Chief Executive Officer - Operational efficiencies, digital capabilities, optionality for our supply chain, and we believe, the trust of our employees and Members to do our best to anticipate their needs and keep them safe, have contributed to our strong performance for the third quarter."
About Price Smart
PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise and services at low prices to PriceSmart members. PriceSmart operates 45 warehouse clubs in 12 countries and one U.S. territory (seven each in Colombia, Costa Rica, and Panama; five in the Dominican Republic, four in Trinidad and Guatemala; three in Honduras; two each in El Salvador and Nicaragua; and one each in Aruba, Barbados, Jamaica and the United States Virgin Islands).
Overview of Price Smart 3rd quarter 2021 earnings report
- THIRD QUARTER DILUTED EARNINGS PER SHARE OF $0.73
- NET MERCHANDISE SALES GREW 11.6%
- OPERATING INCOME INCREASED 50.4%
- TRAILING 12-MONTH MEMBERSHIP RENEWAL RATE OF 87.6%
Third Quarter Financial Results
Total revenues for the third quarter of fiscal year 2021 increased 11.9% to $895.3 million compared to $799.9 million in the comparable period of the prior year. For the third quarter of fiscal year 2021, net merchandise sales increased 11.6% to $857.5 million from $768.4 million in the third quarter of fiscal year 2020. Foreign currency exchange rate fluctuations impacted net merchandise sales negatively by $11.6 million, or 1.6%, versus the same period in the prior year.
The Company had 47 warehouse clubs in operation as of May 31, 2021 compared to 45 warehouse clubs in operation as of May 31, 2020.
Comparable net merchandise sales for the 45 warehouse clubs that have been open for greater than 13 ½ calendar months increased 8.8% for the 13-week period ended May 30, 2021 compared to the comparable period of the prior year. Foreign currency exchange rate fluctuations impacted comparable net merchandise sales negatively by $11.8 million or 1.5% versus the same period in the prior year.
The Company recorded operating income during the fiscal third quarter of $36.0 million compared to operating income of $24.0 million in the prior year period. Net income attributable to PriceSmart was $22.5 million, or $0.73 per diluted share, in the third quarter of fiscal year 2021 as compared to $12.7 million, or $0.41 per diluted share, in the third quarter of fiscal year 2020.
Price Smart's management commentary on their 3rd quarter 2021 results
SAN DIEGO, July 8, 2021 /PRNewswire/ -- PriceSmart, Inc. (NASDAQ: PSMT), operator of 47 warehouse clubs in 12 countries and one U.S. territory, today announced its results of operations for the fiscal third quarter of 2021 which ended on May 31, 2021.
Comments from Sherry S. Bahrambeygui, Chief Executive Officer:
"Operational efficiencies, digital capabilities, optionality for our supply chain, and we believe, the trust of our employees and Members to do our best to anticipate their needs and keep them safe, have contributed to our strong performance for the third quarter. Our total and comparable sales grew in the third quarter of fiscal year 2021, 11.6% and 8.8%, respectively, versus the same period last year. We continue to navigate through significant challenges in several of our markets, including rising COVID cases, club closures and restrictions, social unrest and economic pressures. However, our team is unwavering in its commitment to excel and deliver great value to our Members, regardless of the circumstances.
"Efforts to expand Membership benefits continue, such as our Wellness initiatives in Optical, Pharmacy and Audiology services. Our investments in technology and our omni-channel initiatives have enabled us to further enhance services, benefits, and convenience for our Members, among other things. Our trailing 12-month Membership renewal rate is 87.6% - higher than its pre-COVID level - and our Membership base is rapidly approaching its peak pre-COVID level.
"We are on target with plans to open new warehouse clubs in Guatemala City, Guatemala and Bucaramanga, Colombia in the fall of 2021, and in Portmore, Jamaica in the spring of 2022.
"Our team has innovated, elevated performance and delivered results in unprecedented ways. This has inspired us all for the future of our company."
"Operational efficiencies, digital capabilities, optionality for our supply chain, and we believe, the trust of our employees and Members to do our best to anticipate their needs and keep them safe, have contributed to our strong performance for the third quarter. Our total and comparable sales grew in the third quarter of fiscal year 2021, 11.6% and 8.8%, respectively, versus the same period last year. We continue to navigate through significant challenges in several of our markets, including rising COVID cases, club closures and restrictions, social unrest and economic pressures. However, our team is unwavering in its commitment to excel and deliver great value to our Members, regardless of the circumstances.
"Efforts to expand Membership benefits continue, such as our Wellness initiatives in Optical, Pharmacy and Audiology services. Our investments in technology and our omni-channel initiatives have enabled us to further enhance services, benefits, and convenience for our Members, among other things. Our trailing 12-month Membership renewal rate is 87.6% - higher than its pre-COVID level - and our Membership base is rapidly approaching its peak pre-COVID level.
"We are on target with plans to open new warehouse clubs in Guatemala City, Guatemala and Bucaramanga, Colombia in the fall of 2021, and in Portmore, Jamaica in the spring of 2022.
"Our team has innovated, elevated performance and delivered results in unprecedented ways. This has inspired us all for the future of our company."
Price Smart (PSMT) stock chart for the last 5 years
The image below shows the stock price history of Price Smart over the last 5 years. And it's not been a very good time for Price Smart stockholders. Over the last 5 years the stock provided a very average 15.3%
The stock of Price Smart is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term momentum and sentiment of Price Smart is very negative at this point in time.
The stock of Price Smart is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term momentum and sentiment of Price Smart is very negative at this point in time.
Price Smart (NASDAQ: PSMT) latest stock valuation
So what is Price Smart stock worth based on the release of their latest earnings report and their outlook provided. Based on their earnings report and the outlook provided our valuation model provides a target price (full value price) for Price Smart of $54.20 a stock. We therefore believe that the stock is overvalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $54.20. So a good entry point into PriceSmart stock would be at $48.80 or below.
We expect the stock of Price Smart to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $54.20. So a good entry point into PriceSmart stock would be at $48.80 or below.
We expect the stock of Price Smart to pull back from current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release for PriceSmart
It is expected that Price Smart will release their 4th quarter 2021 earnings report in early October 2021