For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine PriceSmart, Inc.'s (NasdaqGS:PSMT) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Could PSMT beat the long-term trend and outperform its industry?
PSMT's trailing twelve-month earnings (from 30 November 2019) of US$78m has jumped 18% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.2%, indicating the rate at which PSMT is growing has accelerated. How has it been able to do this? Let's see if it is only due to an industry uplift, or if PriceSmart has experienced some company-specific growth.
In terms of returns from investment, PriceSmart has fallen short of achieving a 20% return on equity (ROE), recording 9.6% instead. However, its return on assets (ROA) of 5.2% exceeds the US Consumer Retailing industry of 4.9%, indicating PriceSmart has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for PriceSmart’s debt level, has declined over the past 3 years from 19% to 12%.
What does this mean?
Though PriceSmart's past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn't always indicative of a continued optimistic outlook. I recommend you continue to research PriceSmart to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PSMT’s future growth? Take a look at our free research report of analyst consensus for PSMT’s outlook.
- Financial Health: Are PSMT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 November 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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