PriceSmart Earnings Preview

PriceSmart PSMT, the warehouse store operator, reports fiscal first-quarter earnings before the bell today and analysts are expecting the company to post a profit of of 58 cents a share on revenue of $472.51 million. Assuming those numbers are met, that would equal 16% profit growth and 22.4% revenue growth from the year-earlier quarter. In its fiscal fourth quarter, PriceSmart earned $12.7 million or 42 cents on revenue of $447.4 million. The company has topped Wall Street estimates in three of the previous four quarters, but the miss came in the fiscal fourth quarter so analysts investors will likely be keeping a close on eye on what the company has to say about costs. PriceSmart has been waging a cost war as in trying to fight rising costs, but its gross margin and operating margin both trail what rivals are posting, on average. As the stock is up over 88% in the past year and trades at almost 22 times forward earnings, any earnings miss accompanied by weak guidance could slam the shares. Conversely, positive guidance along with bullish margin news could help PriceSmart crack through resistance at $78. The stock closed below $71 on Thursday, but the average analyst price target is $84, implying there could be significant upside in PriceSmart shares.