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For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $4.76 billion, suggesting a rise of 39.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $8.94 per share, suggesting a jump of 73.3% from the year-ago reported figure. The estimate has been unchanged over the past 30 days.
Image Source: Zacks Investment Research
MercadoLibre has a mixed earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 2.1%. The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once, the average negative surprise being 0.4%.
Our proven model does not conclusively predict an earnings beat for MercadoLibre this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
MercadoLibre’s efforts to bolster its e-commerce business by promoting branding and loyalty are expected to have driven growth in its unique buyer base in the second quarter. Growing momentum across the marketplace and non-marketplace businesses is expected to have been a positive.
The impacts of the company’s expanding online-to-offline offerings are likely to get reflected in the upcoming results.
Strength in MELI’s first-party services, particularly in Brazil, and growing fulfillment penetration are anticipated to have been other positives for its e-commerce business.
The company’s efforts to improve product selection are expected to have continued driving growth across verticals, particularly fashion, consumer electronics, apparel and sports categories.
Strong investments in its logistics business are anticipated to have favored the delivery system’s performance in the to-be-reported quarter.
The expanding managed logistics network is likely to have benefited the business’s second-quarter performance.
Strong shipping services are expected to have helped the company deliver enhanced shopping experiences to its customers in the quarter to be reported. It is likely to have contributed to shipment growth in the quarter under review.
These factors are expected to have contributed well to second-quarter commerce revenue growth. The Zacks Consensus Estimate for commerce revenues is pegged at $2.77 billion, indicating a year-over-year rise of 43.1%.
MercadoLibre’s growing ad initiatives, including its automated buying platform for display ads accompanied by live reports and unique insight analysis, enhanced bidding algorithm for product ads and the new placements on search and product pages for more visibility to sponsored products, are likely to have bolstered its ad revenues in the quarter under review.
Strong momentum across its fintech business, owing to an expanding product offering and solid momentum in Mercado Pago, is expected to have boosted the total payment volumes.
Strength in assets under management and Mercado Pago credit card is anticipated to have aided the performance of the fintech business in the second quarter. The Zacks Consensus Estimate for fintech revenues is pegged at $2.02 billion, suggesting year-over-year growth of 36.8%.
Upswing In Key Metrics
The Zacks Consensus Estimate for gross merchandise volume is pegged at $12.08 billion, indicating growth of 15% from the year-ago reported figure.
The consensus mark for total payments volume is pegged at $48.84 billion, implying year-over-year growth of 16.1%
The consensus mark for the number of successful items sold is pegged at 380 million, suggesting a year-over-year rise of 16.9%. The same for the number of successful items shipped is pegged at 374 million, indicating year-over-year growth of 17.2%.
Price Performance & Valuation
MercadoLibre’s shares have gained 3.3% on a year-to-date basis, underperforming the industry, the Zacks Retail-Wholesale sector and the S&P 500 index’s rise of 14.6%, 10.1% and 14.8%, respectively.
MercadoLibre has also underperformed the major players in the industry like Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) , whose shares have rallied 16.1% and 31.7% in the year-to-date period.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value that MercadoLibre offers investors at current levels.
Currently, MELI is trading at a premium with a trailing 12-month P/S of 3.7X compared with the industry’s 1.66X, reflecting a stretched valuation at present.
Image Source: Zacks Investment Research
Investment Thesis
MercadoLibre’s long-term prospects are expected to benefit from its strengthening e-commerce business. Its leading position in Latin America (LATAM), especially in Brazil, Mexico and Argentina, is a major positive. Strength in MELI’s integrated advertising platform is a plus. Solid momentum in its Mercado Pago platform and the growing credit business are expected to boost its prospects in the booming fintech industry in the days ahead.
However, market uncertainties, high inflation and weakening macro conditions in Argentina are making the company’s near-term prospects foggy. Mounting expenses related to warehousing and shipping are hurting its margin expansion.
Although MercadoLibre has a strong foothold in the online retail market of LATAM, rising competitive pressure from Amazon, which is making strong efforts to expand its presence in LATAM, is concerning. Intense competition from Walmart, which is making good progress in the region, especially in Mexico, is another risk.
Conclusion
No matter how the upcoming quarterly results play out, we suggest the current MELI shareholders maintain their positions. However, new investors should wait for a more favorable entry point, given the uncertainties surrounding the company’s prospects.
Image: Bigstock
MecadoLibre (MELI) Stock Before Q2 Earnings: Buy, Sell, or Hold?
MercadoLibre (MELI - Free Report) is scheduled to release its second-quarter 2024 results on Aug 1.
For the second quarter, the Zacks Consensus Estimate for revenues is pegged at $4.76 billion, suggesting a rise of 39.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $8.94 per share, suggesting a jump of 73.3% from the year-ago reported figure. The estimate has been unchanged over the past 30 days.
Image Source: Zacks Investment Research
MercadoLibre has a mixed earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 2.1%. The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same once, the average negative surprise being 0.4%.
MercadoLibre, Inc. Price and EPS Surprise
MercadoLibre, Inc. price-eps-surprise | MercadoLibre, Inc. Quote
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for MercadoLibre this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
MercadoLibre has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors to Consider
MercadoLibre’s efforts to bolster its e-commerce business by promoting branding and loyalty are expected to have driven growth in its unique buyer base in the second quarter. Growing momentum across the marketplace and non-marketplace businesses is expected to have been a positive.
The impacts of the company’s expanding online-to-offline offerings are likely to get reflected in the upcoming results.
Strength in MELI’s first-party services, particularly in Brazil, and growing fulfillment penetration are anticipated to have been other positives for its e-commerce business.
The company’s efforts to improve product selection are expected to have continued driving growth across verticals, particularly fashion, consumer electronics, apparel and sports categories.
Strong investments in its logistics business are anticipated to have favored the delivery system’s performance in the to-be-reported quarter.
The expanding managed logistics network is likely to have benefited the business’s second-quarter performance.
Strong shipping services are expected to have helped the company deliver enhanced shopping experiences to its customers in the quarter to be reported. It is likely to have contributed to shipment growth in the quarter under review.
These factors are expected to have contributed well to second-quarter commerce revenue growth. The Zacks Consensus Estimate for commerce revenues is pegged at $2.77 billion, indicating a year-over-year rise of 43.1%.
MercadoLibre’s growing ad initiatives, including its automated buying platform for display ads accompanied by live reports and unique insight analysis, enhanced bidding algorithm for product ads and the new placements on search and product pages for more visibility to sponsored products, are likely to have bolstered its ad revenues in the quarter under review.
Strong momentum across its fintech business, owing to an expanding product offering and solid momentum in Mercado Pago, is expected to have boosted the total payment volumes.
Strength in assets under management and Mercado Pago credit card is anticipated to have aided the performance of the fintech business in the second quarter. The Zacks Consensus Estimate for fintech revenues is pegged at $2.02 billion, suggesting year-over-year growth of 36.8%.
Upswing In Key Metrics
The Zacks Consensus Estimate for gross merchandise volume is pegged at $12.08 billion, indicating growth of 15% from the year-ago reported figure.
The consensus mark for total payments volume is pegged at $48.84 billion, implying year-over-year growth of 16.1%
The consensus mark for the number of successful items sold is pegged at 380 million, suggesting a year-over-year rise of 16.9%. The same for the number of successful items shipped is pegged at 374 million, indicating year-over-year growth of 17.2%.
Price Performance & Valuation
MercadoLibre’s shares have gained 3.3% on a year-to-date basis, underperforming the industry, the Zacks Retail-Wholesale sector and the S&P 500 index’s rise of 14.6%, 10.1% and 14.8%, respectively.
MercadoLibre has also underperformed the major players in the industry like Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) , whose shares have rallied 16.1% and 31.7% in the year-to-date period.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
Now, let us look at the value that MercadoLibre offers investors at current levels.
Currently, MELI is trading at a premium with a trailing 12-month P/S of 3.7X compared with the industry’s 1.66X, reflecting a stretched valuation at present.
Image Source: Zacks Investment Research
Investment Thesis
MercadoLibre’s long-term prospects are expected to benefit from its strengthening e-commerce business. Its leading position in Latin America (LATAM), especially in Brazil, Mexico and Argentina, is a major positive. Strength in MELI’s integrated advertising platform is a plus. Solid momentum in its Mercado Pago platform and the growing credit business are expected to boost its prospects in the booming fintech industry in the days ahead.
However, market uncertainties, high inflation and weakening macro conditions in Argentina are making the company’s near-term prospects foggy. Mounting expenses related to warehousing and shipping are hurting its margin expansion.
Although MercadoLibre has a strong foothold in the online retail market of LATAM, rising competitive pressure from Amazon, which is making strong efforts to expand its presence in LATAM, is concerning. Intense competition from Walmart, which is making good progress in the region, especially in Mexico, is another risk.
Conclusion
No matter how the upcoming quarterly results play out, we suggest the current MELI shareholders maintain their positions. However, new investors should wait for a more favorable entry point, given the uncertainties surrounding the company’s prospects.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.