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MercadoLibre, Inc. (MELI) Hits Fresh High: Is There Still Room to Run?
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Have you been paying attention to shares of MercadoLibre (MELI - Free Report) ? Shares have been on the move with the stock up 21% over the past month. The stock hit a new 52-week high of $1388.39 in the previous session. MercadoLibre has gained 63.9% since the start of the year compared to the 20.3% move for the Zacks Retail-Wholesale sector and the 43.6% return for the Zacks Internet - Commerce industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 2, 2023, MercadoLibre reported EPS of $5.16 versus consensus estimate of $4.13.
For the current fiscal year, MercadoLibre is expected to post earnings of $19.25 per share on $13.86 billion in revenues. This represents a 101.99% change in EPS on a 31.55% change in revenues. For the next fiscal year, the company is expected to earn $29.57 per share on $17.22 billion in revenues. This represents a year-over-year change of 53.61% and 24.22%, respectively.
Valuation Metrics
MercadoLibre may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
MercadoLibre has a Value Score of C. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 72.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.8X. On a trailing cash flow basis, the stock currently trades at 78.8X versus its peer group's average of 16.9X. Additionally, the stock has a PEG ratio of 1.64. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, MercadoLibre currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if MercadoLibre meets the list of requirements. Thus, it seems as though MercadoLibre shares could still be poised for more gains ahead.
How Does MELI Stack Up to the Competition?
Shares of MELI have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Alibaba Group Holding Limited (BABA - Free Report) . BABA has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of C.
Earnings were strong last quarter. Alibaba Group Holding Limited beat our consensus estimate by 21.83%, and for the current fiscal year, BABA is expected to post earnings of $8.37 per share on revenue of $130.89 billion.
Shares of Alibaba Group Holding Limited have gained 2.7% over the past month, and currently trade at a forward P/E of 11.86X and a P/CF of 11.08X.
The Internet - Commerce industry is in the top 41% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MELI and BABA, even beyond their own solid fundamental situation.
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MercadoLibre, Inc. (MELI) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of MercadoLibre (MELI - Free Report) ? Shares have been on the move with the stock up 21% over the past month. The stock hit a new 52-week high of $1388.39 in the previous session. MercadoLibre has gained 63.9% since the start of the year compared to the 20.3% move for the Zacks Retail-Wholesale sector and the 43.6% return for the Zacks Internet - Commerce industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 2, 2023, MercadoLibre reported EPS of $5.16 versus consensus estimate of $4.13.
For the current fiscal year, MercadoLibre is expected to post earnings of $19.25 per share on $13.86 billion in revenues. This represents a 101.99% change in EPS on a 31.55% change in revenues. For the next fiscal year, the company is expected to earn $29.57 per share on $17.22 billion in revenues. This represents a year-over-year change of 53.61% and 24.22%, respectively.
Valuation Metrics
MercadoLibre may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
MercadoLibre has a Value Score of C. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 72.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.8X. On a trailing cash flow basis, the stock currently trades at 78.8X versus its peer group's average of 16.9X. Additionally, the stock has a PEG ratio of 1.64. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, MercadoLibre currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if MercadoLibre meets the list of requirements. Thus, it seems as though MercadoLibre shares could still be poised for more gains ahead.
How Does MELI Stack Up to the Competition?
Shares of MELI have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Alibaba Group Holding Limited (BABA - Free Report) . BABA has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of C.
Earnings were strong last quarter. Alibaba Group Holding Limited beat our consensus estimate by 21.83%, and for the current fiscal year, BABA is expected to post earnings of $8.37 per share on revenue of $130.89 billion.
Shares of Alibaba Group Holding Limited have gained 2.7% over the past month, and currently trade at a forward P/E of 11.86X and a P/CF of 11.08X.
The Internet - Commerce industry is in the top 41% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MELI and BABA, even beyond their own solid fundamental situation.