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Is PriceSmart (PSMT) Likely to Register Higher Q4 Earnings?

PriceSmart, Inc.PSMT is slated to report fourth-quarter fiscal 2018 results on Oct 25. In the last four quarters, this San Diego, CA-based operator of membership shopping warehouse clubs underperformed the Zacks Consensus Estimate by an average of 7.5%. Nevertheless, investors are counting on a beat by PriceSmart in the to-be-reported quarter. Let's delve deeper into the factors that are likely to influence the results.

How Are Estimates Shaping Up?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 68 cents compared with 64 cents in the year-ago quarter. We note that the Zacks Consensus Estimate has remained stable in the past 30 days. Analysts polled by Zacks now project revenues of $776.3 million, showing an improvement of approximately 6% from the year-ago quarter.

Factors Playing Key Role

PriceSmart's strategy to sell limited products at lower prices has helped it in generating member loyalty and higher sales. Notably, the company offers a limited number of stock keeping units with large pack sizes. Analysts believe that the company's persistent effort to check operating costs relative to net warehouse club sales enables it to offer better price. PriceSmart focuses on increasing the number of private label products as well.

Moreover, the company has been focusing on adding local and regional distribution centers to augment smooth flow of merchandise. Apart from these, the company is experimenting new small warehouse club format. Meanwhile, the retail landscape has been undergoing a fundamental change with retailers rapidly adopting the omni-channel mantra. In this regard, PriceSmart acquired Aeropost - one of the largest cross-border logistics and e-commerce providers in Latin America and the Caribbean.

However, the company's bottom-line has been declining for quite some time now despite an increase in the top line. We note that higher cost of goods sold, increased SG&A expenses and rise in other expenses might have acted as deterrents.

PriceSmart, Inc. Price, Consensus and EPS Surprise

PriceSmart, Inc. Price, Consensus and EPS Surprise | PriceSmart, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively show that PriceSmart is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

PriceSmart has a Zacks Rank #3 but an Earnings ESP of 0.00%, consequently making the surprise prediction difficult.

Stocks With Favorable Combination

Here are few companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores BURL has an Earnings ESP of +2.12% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Dollar General DG has an Earnings ESP of +2.45% and a Zacks Rank #2.

Foot Locker FL has an Earnings ESP of +1.00% and a Zacks Rank #3.

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Foot Locker, Inc. (FL): Free Stock Analysis Report

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PriceSmart, Inc. (PSMT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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