MercadoLibre MELI is scheduled to release its third-quarter 2024 results on Nov. 6.
For the third quarter, the Zacks Consensus Estimate for revenues is pegged at $5.25 billion, suggesting a rise of 39.73% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for third-quarter earnings is pegged at $11.27 per share, suggesting a jump of 57.4% from the year-ago reported figure. The estimate has been unchanged over the past 30 days.
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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Surprise History
MercadoLibre has a mixed earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 20.18%. 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 1.63%.
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 -24.24% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Factors to Influence MercadoLibre’s Q3 Results
MercadoLibre’s core e-commerce operations are expected to have shown robust growth in the third quarter, driven by several strategic initiatives. The company’s focus on brand strengthening and loyalty programs is expected to have contributed to an expanded unique buyer base in the quarter under review. The integration of online-to-offline offerings, particularly strong in Brazil, combined with enhanced first-party services and increased fulfillment penetration, is likely to have strengthened the core marketplace performance.
Product diversification efforts appear promising, with notable growth expected across fashion, consumer electronics, apparel and sports categories. The logistics infrastructure has seen significant investment, with an expanded managed network, potentially improving delivery efficiency and customer experience. These operational enhancements are expected to have supported shipment growth and contributed to the company’s commerce revenues in the to-be-reported quarter. The Zacks Consensus Estimate for commerce revenues is pegged at $3.15 billion, indicating a year-over-year rise of 48.2%.
The advertising segment shows promise bolstered by several technical improvements, including an automated display ad buying platform with enhanced analytics, improved bidding algorithms and strategic placement optimization for sponsored products. These advancements are likely to have boosted advertising revenue streams in the third quarter.
In the fintech sector, Mercado Pago continues to be a growth driver, benefiting from expanded product offerings and strong payment volume trends. The division’s performance is expected to be further strengthened by growing assets under management and increased credit card adoption. The Zacks Consensus Estimate for fintech revenues is pegged at $2.22 billion, suggesting year-over-year growth of 36.6%.
Overall, the combination of e-commerce enhancements, logistics improvements, advertising innovations and fintech expansion suggests a potential for strong third-quarter performance, though actual results will depend on successful execution across these various initiatives.
Upswing in Q3 Estimates for Key Metrics
The Zacks Consensus Estimate for gross merchandise volume is pegged at $12.79 billion, indicating growth of 12.6% from the year-ago reported figure.
The consensus mark for total payments volume is pegged at $49.23 billion, implying year-over-year growth of 4.2%
The consensus mark for the number of successful items sold is pegged at 430 million, suggesting a year-over-year rise of 20.4%. The same for the number of successful items shipped is pegged at 426 million, indicating year-over-year growth of 21.7%.
Price Performance & Valuation
MercadoLibre’s shares have gained 30.8% on a year-to-date basis, outperforming the Zacks Retail-Wholesale sector and the S&P 500 index’s return of 20.8% and 20.5%, respectively.
MercadoLibre has underperformed the major players in the industry like Amazon AMZN and Walmart WMT. Shares of AMZN and WMT have rallied 30.9% and 56.4% 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 4.26X compared with the Zacks Internet – Commerce industry’s 1.7X, reflecting a stretched valuation at present.
MELI’s P/S F12M Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Investment Thesis
MercadoLibre’s investment profile presents a mixed outlook, with strong long-term growth potential in Latin American e-commerce balanced against near-term challenges. The company’s dominant market position across Brazil, Mexico and Argentina, coupled with its expanding fintech platform Mercado Pago and integrated advertising solutions, provides robust growth drivers. However, significant headwinds exist, including Argentina’s economic instability, rising operational costs and intensifying competition from global retail giants like Amazon and Walmart, particularly in Mexico. While high inflation and operating expenses pressure margins, the company’s established regional presence and diversified revenue streams in both e-commerce and fintech sectors suggest resilience against market uncertainties, though careful monitoring of competitive dynamics remains crucial.
Conclusion
Despite near-term macroeconomic headwinds, particularly in Argentina, MercadoLibre presents a compelling investment opportunity ahead of its third-quarter 2024 earnings, supported by its dominant market position in Latin American e-commerce and robust growth across multiple business segments. The estimated 48.2% year-over-year growth in commerce revenues and 36.6% growth in fintech revenues indicate optimism toward the company’s strong execution capability and market penetration. The successful integration of e-commerce, logistics, advertising and fintech operations, combined with strategic investments in fulfillment infrastructure and technological advancements, positions MELI favorably for sustained growth. While competitive pressures from global retailers warrant attention, MercadoLibre’s deep regional expertise, expanding service offerings and proven ability to innovate make it an attractive investment target at current levels.
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