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MercadoLibre (MELI) Declines More Than Market: Some Information for Investors

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MercadoLibre (MELI - Free Report) closed at $1,571.54 in the latest trading session, marking a -0.64% move from the prior day. This change lagged the S&P 500's 0.28% loss on the day. On the other hand, the Dow registered a loss of 0.06%, and the technology-centric Nasdaq decreased by 0.56%.

Heading into today, shares of the operator of an online marketplace and payments system in Latin America had lost 2.4% over the past month, lagging the Retail-Wholesale sector's gain of 6.15% and the S&P 500's gain of 5.24% in that time.

The investment community will be paying close attention to the earnings performance of MercadoLibre in its upcoming release. The company is predicted to post an EPS of $7.16, indicating a 120.31% growth compared to the equivalent quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $4.13 billion, indicating a 37.74% growth compared to the corresponding quarter of the prior year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $22.80 per share and a revenue of $14.35 billion, indicating changes of +139.24% and +36.16%, respectively, from the former year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for MercadoLibre. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. MercadoLibre is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, MercadoLibre is currently trading at a Forward P/E ratio of 69.38. This expresses a premium compared to the average Forward P/E of 20.56 of its industry.

We can additionally observe that MELI currently boasts a PEG ratio of 1.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Commerce industry had an average PEG ratio of 0.65 as trading concluded yesterday.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 39, putting it in the top 16% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MELI in the coming trading sessions, be sure to utilize Zacks.com.


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