PriceSmart not a buy after Q3 results

And there's more unfortunate news. According to The Wall Street Journal (subscription required), the company missed estimates by 3 cents. And gross margin at the warehouses weakened. The Journal also pointed out that the comparison was a little tough since the previous year's similar quarter contained a gain related to litigation. In terms of cash generation, the company seems to be doing all right. According to the PriceSmart's most recent 10Q, net cash from operations increased for the nine-month period.

PriceSmart is an interesting business. Assuming it expands its warehouse assets over time, it could be a good long-term investment. For now, though, I think investors should study the price action. Not only was there a sell-off today, but the stock has been weak the last few months.

Without a doubt, I would not look at this falling share price as a buying opportunity. When I think of PriceSmart's business model and juxtapose it with the price action, my immediate thought is: why not look at Wal-Mart (NYSE: WMT) or Costco (NASDAQ: COST) first? Yes, their stocks have been weak too this year. But I like the brand equities implied by these retail chains a little better. I just don't want to buy PriceSmart at this time.

Disclosure: I don't own any company mentioned; positions can change without notice.