Will PriceSmart Miss in 2Q13?

Zacks

San Diego-based retail warehouse stores operator, PriceSmart, Inc. (PSMT) is set to report second-quarter fiscal 2013 results on Apr 9. In the last quarter it posted a 4.8% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Last quarter was a mixed one for PriceSmart where it beat the Zacks Consensus Estimate for earnings but missed for revenues. Sales grew 11.6% and earnings per share grew 40.4% year over year in the quarter.

PriceSmart had been consistently reporting double-digit growth in monthly sales until January this year. However,Februarysales were up only 7.8%, much below its trend. Management blamed the sales shortfall on one less selling day in February this year as the previous year was a leap year. The sales lag in February created a downward pressure on estimates.

Earnings Whispers?

Our proven model does not conclusively show that PriceSmart is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP:This is because the Most Accurate Estimate stands at $0.79 while the Zacks Consensus Estimate is higher at $0.80. This is a difference of -1.25%.

Zacks Rank #4 (Sell):We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other consumer staples companies you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Flower Foods, Inc (FLO), Earnings ESP of +7.50%and Zacks Rank #1 (Strong Buy)

ConAgra Foods, Inc (CAG), Earnings ESP of +1.72% and Zacks Rank #2 (Buy)

Dollar Tree, Inc. (DLTR), Earnings ESP of +1.75% and Zacks Rank #3 (Hold)

Read the Full Research Report on DLTR

Read the Full Research Report on CAG

Read the Full Research Report on FLO

Read the Full Research Report on PSMT

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