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What's in the Cards for MercadoLibre's (MELI) Q2 Earnings?

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MercadoLibre, Inc.’s (MELI - Free Report) second-quarter 2020 results are expected to reflect strength across e-commerce business, logistics services and online payment solutions.

Q2 Estimates

For the second quarter, the Zacks Consensus Estimate for sales is pegged at $790.8 million, indicating growth of 45% from the prior-year quarter.

The consensus mark for second-quarter earnings stands at 10 cents per share, which has moved north from break-even point over the past seven days. The figure reflects a decline of 67.7% year over year.

Q1 Highlights

In first-quarter 2020, MercadoLibre reported loss of 44 cents per share, wider than the Zacks Consensus Estimate of a loss of 43 cents. Notably, the company had reported earnings of 13 cents per share in the year-ago quarter.

Revenues improved 37.6% on a year-over-year basis (70.5% on an FX neutral basis) to $652.1 million. Further, the figure surpassed the Zacks Consensus Estimate of $644 million.

MercadoLibre, Inc. Price and EPS Surprise

MercadoLibre, Inc. Price and EPS Surprise

MercadoLibre, Inc. price-eps-surprise | MercadoLibre, Inc. Quote

Factors to Note

MercadoLibre’s efforts to bolster e-commerce business by promoting branding and loyalty are likely to have driven growth in its unique buyer base in the second quarter amid the ongoing coronavirus pandemic.

Further, robust free shipping program might have helped the company in delivering enhanced shopping experience to customers in the quarter to be reported. Moreover, it is likely to have contributed to shipment growth via MercadoEnvios in the quarter under review.

Additionally, strong investments on MercadoLibre’s logistics business are expected to have favoredthe delivery system’s performance in the to-be-reported quarter. Further, expanding managed logistics network may have benefited the second-quarterperformance of the business.

The introduction of Flex logistics solutions in Chile and Colombia are anticipated to have delivered enhanced drop shipping experience. Further, Hybrid cross-docking centers might have driven MercadoLibre’s performance in Brazil in the quarter under review.

Furthermore, the company’s strengthening online-to-offline offerings are likely to get reflected in the second-quarter results.

Moreover, its growing initiatives toward strengthening fintech business are likely to have driven the total payment volumes (TPV) in the to-be-reported quarter. Moreover, strength across online payment merchant service and online wallet is anticipated to have benefited the company in the quarter under review.

MercadoLibre’s strength across marketplace and non-marketplace businesses is expected to get reflected in the second-quarter results.

However, the second-quarter resultsare likely to reflect rising expenses related to warehousing and free shipping subsidies.

What Our Model Says

Our proven model conclusively predicts 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MercadoLibre has an Earnings ESP of +93.88% and a Zacks Rank #2.

Other Stocks to Consider

Here are some other stocks you may consider, as our proven model shows that thesetoo have the right combination of elements to post an earnings beat this quarter., Inc. (JD - Free Report) has an Earnings ESP of +13.79% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fastly, Inc. (FSLY - Free Report) has an Earnings ESP of +27.27% and a Zacks Rank #2.

Wayfair, Inc. (W - Free Report) has an Earnings ESP of +21.4% and a Zacks Rank of 3.

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