Enjoying a lazy Saturday and fighting your way through a maze of industrial sized boxes of oatmeal and gallon jugs of ketchup just to get a free sample is a staple of some weekends at Costco (COST). But what if there was a silent Costco killer hiding in the background?
PriceSmart (PSMT) is the largest warehouse membership club operator in South America and the Caribbean, they bring a total store count to 41, in 12 countries and 1 US territory, and this is up 2 stores Y/Y.
PriceSmart primarily focuses on Central America and latin countries, but is making in-roads to become a much larger company than they currently are, and certainly more modern. They recently purchased Aeropost, a digital shopping specialist, to bolster e-commerce efforts as well as help with delivery logistics and home delivery, competing with Amazon (AMZN) and bringing more features than Costco.
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This San Diego company is competing relatively unchecked in Central America, and could expand to South America should it deem fit, as it has the Latin / Hispanic market understood. PriceSmart could also extend this strategy stateside, as Costco operates in very specific markets, but having a “hispanic Costco” to serve heavy latin communities here in the US could give it significant advantage. The US has a growing a diverse hispanic population, and bringing these targeted niche club stores could serve as a boom to the San Diego based retailer.
They are currently a ~$3B market cap company, bringing in a 7.8% growth in revenue to $782.2M for the quarter. EPS missed by $0.02 per share, but revenue beat by $5.2M.
Analysts have been slightly bearish on the stock, and its current ~$93 share price only leaves a small room of margin to the consensus price target of $95 a share. However, continued growth, and long term opportunities in growing emerging markets could mean that this company is setting itself for continued and sustained long term growth, as well as the possibility of competing with the behemoth that is Costco.