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MercadoLibre (MELI) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3-min read

MercadoLibre (MELI) closed the most recent trading day at $1,036.77, moving +0.37% from the previous trading session. This move lagged the S&P 500's daily gain of 1.27%. Meanwhile, the Dow gained 1.18%, and the Nasdaq, a tech-heavy index, added 1.87%.

Coming into today, shares of the operator of an online marketplace and payments system in Latin America had lost 10.72% in the past month. In that same time, the Retail-Wholesale sector gained 2.76%, while the S&P 500 gained 0.37%.

Wall Street will be looking for positivity from MELI as it approaches its next earnings report date. In that report, analysts expect MELI to post earnings of -$0.05 per share. This would mark year-over-year growth of 94.85%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $975.90 million, up 61.83% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.09 per share and revenue of $3.51 billion, which would represent changes of +102.43% and +52.95%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MELI. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 180% higher. MELI is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, MELI currently has a Forward P/E ratio of 11738.41. This represents a premium compared to its industry's average Forward P/E of 45.79.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 66, putting it in the top 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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Zacks Investment Research