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

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MercadoLibre (MELI - Free Report) closed the most recent trading day at $1,223.77, moving +0.98% from the previous trading session. This move lagged the S&P 500's daily gain of 1.22%. At the same time, the Dow added 1.26%, and the tech-heavy Nasdaq gained 4.63%.

Coming into today, shares of the operator of an online marketplace and payments system in Latin America had lost 8.2% in the past month. In that same time, the Retail-Wholesale sector gained 4.92%, while the S&P 500 gained 6.22%.

MercadoLibre will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $4.13, up 69.96% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.22 billion, up 24.04% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $16.68 per share and revenue of $13.44 billion. These totals would mark changes of +75.03% and +27.58%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for MercadoLibre. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. Within the past 30 days, our consensus EPS projection has moved 1.91% higher. MercadoLibre is currently a Zacks Rank #1 (Strong Buy).

Investors should also note MercadoLibre's current valuation metrics, including its Forward P/E ratio of 72.66. This represents a premium compared to its industry's average Forward P/E of 19.07.

We can also see that MELI currently has a PEG ratio of 1.54. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Commerce industry currently had an average PEG ratio of 1.01 as of yesterday's close.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 68, which puts it in the top 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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