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

Zacks Equity Research
·2-min read

MercadoLibre (MELI) closed at $1,641.52 in the latest trading session, marking a +0.27% move from the prior day. This move lagged the S&P 500's daily gain of 0.42%.

Prior to today's trading, shares of the operator of an online marketplace and payments system in Latin America had gained 5.09% over the past month. This has outpaced the Retail-Wholesale sector's loss of 1.87% and the S&P 500's gain of 2.64% in that time.

MELI will be looking to display strength as it nears its next earnings release. In that report, analysts expect MELI to post earnings of $0.09 per share. This would mark a year-over-year decline of 91.89%. Meanwhile, our latest consensus estimate is calling for revenue of $1.5 billion, up 70.87% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of -$0.69 per share and revenue of $6.5 billion, which would represent changes of -762.5% and +63.58%, respectively, from the prior year.

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Any recent changes to analyst estimates for MELI should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate has moved 79.25% higher. MELI is currently a Zacks Rank #3 (Hold).

In terms of valuation, MELI is currently trading at a Forward P/E ratio of 3446.38. This represents a premium compared to its industry's average Forward P/E of 46.54.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 159, putting it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MELI in the coming trading sessions, be sure to utilize Zacks.com.


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