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Should Value Investors Buy PriceSmart (PSMT) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is PriceSmart (PSMT - Free Report) . PSMT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 15.96. This compares to its industry's average Forward P/E of 30.86. Over the last 12 months, PSMT's Forward P/E has been as high as 17.56 and as low as 15.08, with a median of 16.33.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PSMT has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.7.

Finally, investors should note that PSMT has a P/CF ratio of 12.48. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. PSMT's P/CF compares to its industry's average P/CF of 29.90. PSMT's P/CF has been as high as 13.52 and as low as 10.59, with a median of 12.32, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that PriceSmart is likely undervalued currently. And when considering the strength of its earnings outlook, PSMT sticks out at as one of the market's strongest value stocks.


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