PriceSmart's Base-Case Calls for $45 in Upside-Bull-Case Is Better

PriceSmart’s (NASDAQ: PSMT) stock price action cleared a significant hurdle in 2025, crossing to new all-time highs early in the year. The move signals a base case for $45 upside: the market broke out of a $45 trading range and later confirmed prior resistance (the top of the range) as its new support level.

This is a textbook movement signalling a base case equal to the trading range, and a bull case worth the percentage gain from the bottom to the top of the range. As of early 2026, following the recent earnings release for Q1 of the company's fiscal 2026, this market is on track to hit its base-case target before mid-2026.

Driving PriceSmart's rally is sustained, profitable growth in a critical market. The stock presents value relative to its peers, has grown faster over a comparable period, and dominates in its home territory.

PriceSmart is well-positioned as an emerging markets leader, with emerging market GDP growth, underpinned by industrialization and middle-class expansion, forecasted to lead globally. Emerging markets, including Latin America, where PriceSmart operates, are forecasted to grow over 100 basis points faster than the world and approximately twice as fast as in the United States.

PriceSmart Signals Momentum Gains With Q1 Report

PriceSmart had a solid fiscal Q1 wth growth nearing 10%, driven by new stores and comp-store gains. The $1.38 billion in net revenue also outperformed analyst consensus by 140 basis points, with metrics such as the 16% increase in membership fees indicating that this strength will continue. Internally, net merchandise sales increased by 10.6% (9.5% on an FX-neutral basis) while comp sales increased by 8%. 

Earnings were also favorable. The company’s $1.29 in GAAP earnings beat consensus by 1 cent, despite earnings being impacted by increased investment activity, including an accelerated construction outlook.

The company’s 2026 update includes plans to build four new stores, already under construction, and expansion in critical Caribbean markets like Costa Rica, Jamaica, and the Dominican Republic. 

The company’s balance sheet provides no red flags, signalling an ability to continue executing its strategy.

Highlights include increased current and total assets offset by reduced long-term debt and smaller increases in liabilities. Total liabilities are low at less than 0.5 times the assets and one times the equity, and approximately one times the cash, equivalents, and inventory—a fortress position. 

Institutions Accumulate PriceSmart Stock, Highlighting the Value Opportunity

While analyst coverage is tepid, the single rating is a Strong Buy, and institutions are buying. Institutions own more than 80% of this stock and have accumulated it in every quarter of 2025, with buying ramping and selling declining.

The group is likely to continue the trend in 2026 due to PriceSmart's excellent growth and value.

Trading at 26X its 2026 earnings, the 2028 forecast assumes a 45% discount relative to the growth outlook, and there is also the discount relative to peers to consider. 

While Walmart (NASDAQ: WMT) and Costco (NASDAQ: COST) pay higher percentages of their earnings as dividends, buy back shares, and have limited emerging-market risk, the depth of the discount presented by PriceSmart is unwarranted.

It is 20 handles shy of the 45X valuations assigned to Costco and Walmart, suggesting as much as 75% upside is possible.

Assuming the forecasts for PriceSmart’s long-term earnings growth are cautious, the upside potential is greater. Regarding the dividend, it yields approximately 0.9% with shares trading near $134, with a favorable payout ratio of about 25%. 

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The article "PriceSmart’s Base-Case Calls for $45 in Upside—Bull-Case Is Better" first appeared on MarketBeat.