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MercadoLibre (MELI) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
·3-min read

MercadoLibre (MELI) closed at $1,294.32 in the latest trading session, marking a -0.37% move from the prior day. This change lagged the S&P 500's daily gain of 0.52%. Meanwhile, the Dow gained 0.54%, and the Nasdaq, a tech-heavy index, added 0.19%.

Coming into today, shares of the operator of an online marketplace and payments system in Latin America had gained 27.25% in the past month. In that same time, the Retail-Wholesale sector gained 7.84%, while the S&P 500 gained 4.79%.

Wall Street will be looking for positivity from MELI as it approaches its next earnings report date. This is expected to be November 4, 2020. The company is expected to report EPS of $0.08, up 108.25% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.01 billion, up 67.82% from the prior-year quarter.

MELI's full-year Zacks Consensus Estimates are calling for earnings of $0.84 per share and revenue of $3.63 billion. These results would represent year-over-year changes of +122.64% and +58.11%, respectively.

Investors should also note any recent changes to analyst estimates for MELI. 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. 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. The Zacks Consensus EPS estimate has moved 101.81% higher within the past month. MELI is currently a Zacks Rank #1 (Strong Buy).

In terms of valuation, MELI is currently trading at a Forward P/E ratio of 1551.2. This represents a premium compared to its industry's average Forward P/E of 46.25.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 96, which puts it in the top 38% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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Zacks Investment Research