Value
5.6/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 4.3 |
| P/S | 9.8 |
| EV/EBITDA | 3.9 |
| Fwd P/E | 5.0 |
| PEG | 5.6 |
- ▸Forward P/E: 25.2x
- ▸PEG: 1.34
PSMT · Why this verdict
Why PriceSmart (PSMT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
PriceSmart operates a membership-based discount warehouse model with a Piotroski F-Score of 7/9 and a strong economic moat score of 6.2, but the stock has exceeded its analyst target by 27.5%, earnings quality is poor (44% free cash flow conversion), and RSI at 72 signals near-term overbought conditions.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At $179.73, the stock has moved 27.5% above what the analyst target implies and RSI is at 72, the combination of which leaves no margin of safety for new entries and creates a meaningful mean-reversion risk if sentiment softens. Warnings | Analyst price targets are revised upward by more than 25% within 12 months, or price corrects to below $145 to re-establish a constructive entry. | →Stable |
| CounterInternational membership retailers operating in underpenetrated markets can sustain premium valuations well above near-term analyst targets when long-term growth runways are visible. | ||
Free cash flow is only 44% of net income, flagged as a quality red flag, indicating that either capital expenditures or working capital needs are substantially consuming cash that appears as accounting profit, undermining the reliability of reported earnings. Quality breakdown | Free cash flow conversion improves above 70% of net income within the next 2 annual reporting periods. | ↑Improving |
| CounterWarehouse expansion into new international markets requires heavy upfront capex that temporarily depresses free cash flow without reflecting any underlying earnings quality problem. | ||
PriceSmart's membership-based warehouse model has earned a moat score of 6.2 out of 10 and a Piotroski F-Score of 7/9, suggesting a business with meaningful competitive advantages through recurring membership fees, member loyalty, and barriers to entry in its international discount retail markets. Quality breakdown | Membership renewal rates remain above 85% over the next 12 months, sustaining the moat and generating predictable fee revenue regardless of merchandise margin fluctuations. | ↑Improving |
| CounterInternational discount warehouse businesses face significant political, currency, and competitive risks in Latin American markets that can erode the apparent moat advantages quickly. | ||
PriceSmart has beaten estimates in only 2 of the last 4 quarters and missed in 2, with the average quarterly surprise near zero (0.42%), indicating that the business is performing essentially in line with already-set expectations rather than consistently exceeding them. Earnings | The earnings beat rate improves to 3 of 4 quarters in the next year, and average quarterly surprise rises above 5%. | ↑Improving |
| CounterAn average surprise near zero with a balanced beat-miss record may reflect high analyst estimate accuracy rather than business weakness, and could be a sign of management credibility in guidance. | ||
At $179.73, the stock has moved 27.5% above what the analyst target implies and RSI is at 72, the combination of which leaves no margin of safety for new entries and creates a meaningful mean-reversion risk if sentiment softens.
→StableWarnings
- Expectation
- Analyst price targets are revised upward by more than 25% within 12 months, or price corrects to below $145 to re-establish a constructive entry.
CounterInternational membership retailers operating in underpenetrated markets can sustain premium valuations well above near-term analyst targets when long-term growth runways are visible.
Free cash flow is only 44% of net income, flagged as a quality red flag, indicating that either capital expenditures or working capital needs are substantially consuming cash that appears as accounting profit, undermining the reliability of reported earnings.
↑ImprovingQuality breakdown
- Expectation
- Free cash flow conversion improves above 70% of net income within the next 2 annual reporting periods.
CounterWarehouse expansion into new international markets requires heavy upfront capex that temporarily depresses free cash flow without reflecting any underlying earnings quality problem.
PriceSmart's membership-based warehouse model has earned a moat score of 6.2 out of 10 and a Piotroski F-Score of 7/9, suggesting a business with meaningful competitive advantages through recurring membership fees, member loyalty, and barriers to entry in its international discount retail markets.
↑ImprovingQuality breakdown
- Expectation
- Membership renewal rates remain above 85% over the next 12 months, sustaining the moat and generating predictable fee revenue regardless of merchandise margin fluctuations.
CounterInternational discount warehouse businesses face significant political, currency, and competitive risks in Latin American markets that can erode the apparent moat advantages quickly.
PriceSmart has beaten estimates in only 2 of the last 4 quarters and missed in 2, with the average quarterly surprise near zero (0.42%), indicating that the business is performing essentially in line with already-set expectations rather than consistently exceeding them.
↑ImprovingEarnings
- Expectation
- The earnings beat rate improves to 3 of 4 quarters in the next year, and average quarterly surprise rises above 5%.
CounterAn average surprise near zero with a balanced beat-miss record may reflect high analyst estimate accuracy rather than business weakness, and could be a sign of management credibility in guidance.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.1 |
| ROA | 4.5 |
| Gross margin | 0.0 |
| Op margin | 1.6 |
| Net margin | 1.4 |
| Current ratio | 4.7 |
| FCF quality | 4.7 |
| Moat | 6.9 |
| Piotroski F | 7.8 |
- ▸Earnings quality warning: 61% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.0 |
| EPS growth | 5.8 |
Momentum
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 7.5 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+4.2%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.1 |
| Analyst rating | 5.9 |
| Price target | 6.8 |
- ▸Light analyst coverage (2.0) — signal dampened
Insider
5.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.5 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $945,222 (0.019% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.5 |
| quality rank | 1.7 |
| growth rank | 6.7 |
- ▸Conservative debt levels
Technical
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.9 |
| 52w position | 6.2 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.4 |
| days to cover | 3.6 |
| volatility | 5.3 |
| put call | 0.0 |
| implied vol | 6.3 |
| beta | 8.6 |
| debt equity | 9.0 |
- ▸Elevated put/call: 4.14
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.9 |
| dividend safety | 6.8 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:69d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.8<4.5
- ASYMMETRY:-0.8=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.77
Upside
-4.5%
Downside
5.8%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $5.0B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 2.8<4.5 outcome against Technical at 8.7 and asymmetric R:R of -0.77.
The strongest dimensions are Technical at 8.7, Sentiment at 6.2, and Growth at 5.9; the weakest are Momentum at 2.8, Quality at 4.0, and Peer rank at 5.2. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.77 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Membership Model Moat Piotroski
Trip ifMembership renewal rate falls below 80% as disclosed in any quarterly or annual report.
- P2Poor Earnings Quality Fcf Gap
Trip ifFree cash flow conversion falls below 25% of net income in any reported annual period.
- P3Mixed Earnings Record Two Misses
Trip ifEarnings miss rate rises to 3 or more misses in the next 4 quarters with average surprise below -5%.
- P4Target Exceeded Overbought Entry
Trip ifPrice falls below $140 on weekly close or analyst consensus target drops below $140.