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The company has been called the Amazon of Argentina and the eBay of Latin America. Shares of MercadoLibre have skyrocketed over 115% in 2019 alone. And the e-commerce powerhouse is set to expand, with a focus on digital and mobile payments. So let’s see why MELI stock is Tuesday’s Bull of the Day.
Business Overview
Buenos Aires, Argentina-based MercadoLibre’s website serves nearly 20 countries, with Brazil, Argentina, and Mexico by far its largest and most important markets. The company closed the first quarter of 2019 with 280 million registered users, up from 223 million in the prior-year quarter. Before we go any further, investors should note that Amazon and Alibaba currently have limited exposure in MercadoLibre’s biggest markets.
Last quarter, MercadoLibre saw its revenue soar 93% on an FX neutral basis and roughly 48% overall, with the big difference due to the strength of the U.S. dollar. Much of this jump was based on the power of the company’s payment platform, known as MercadoPago. Total payment volume topped the $5.5 billion mark for the first time, up 35% in USD and 82.5% on an FX neutral basis.
MercadoLibre said that its mobile wallet business reached four times the number of active payers in Q1 2019, with total payment volume in Argentina, Brazil, and Mexico pulling in triple digit growth year-over-year. The company also offers a broader suite of fintech products, which includes QR code in-store payments, mobile point of sale, and more.
The company will continue to invest heavily in its payment infrastructure and logistics in growing e-commerce markets, where some consumers still don’t have bank accounts. MercadoLibre’s expansion in digital payments comes as fintech proliferates from Square to big banks. Plus, in March the Latin American powerhouse announced that it would raise as much as $1.85 billion in a secondary stock offering, which included a $750 million strategic investment from PayPal. “Digital commerce in Latin America is experiencing tremendous growth and MercadoLibre is well-positioned for continued leadership,” PayPal CEO Dan Schulman said in prepared remarks.
Price Movement
Clearly, there seems to be a lot to be excited about in terms of MercadoLibre’s growth potential. And we can see that its revenues have soared in recent years, which has helped its stock price climb nearly 600% in the last five years. MELI stock is also up over 100% in the last 12 months and closed regular trading Monday at $629.97 per share, not too far off from its 52-week intraday highs of $672.55.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for the company’s second quarter 2019 revenue to surge 48.4% from the year-ago period to $497.58 million, with the strong U.S. dollar set to make MELI’s top-line growth appear weaker than it really is. MercadoLibre’s full-year fiscal 2019 revenue is projected to soar 50% to $2.15 billion. Peeking further down the road, the company’s 2020 revenue is expected to surge 39% higher than our current year estimate to hit $2.99 billion.
Until last quarter, the company had struggled to post positive adjusted earnings, as it spent heavily on expansion. With this in mind, MercadoLibre’s adjusted Q2 EPS figure is expected to climb from a loss of $0.25 in Q2 2018 to positive $0.28 per share. On top of that, the company’s full-year fiscal 2019 earnings are projected to skyrocket from a loss of $0.82 per share to +$1.16. Better still, the e-commerce firm’s adjusted 2020 EPS figure is expected to climb 181% higher than our 2019 estimate to $3.26 per share.
On top of this impressive bottom-line growth, we can see just how much more positive analysts have turned recently in terms of MELI’s earnings expectations. The company also blew by our quarterly earnings estimates in each of the last two periods by 533.33% and 66.67%, respectively.
Bottom Line
MercadoLibre’s recent earnings estimate revision strength helps it earn a Zacks Rank #1 (Strong Buy) right now. MELI also sports an “A” grade for Growth in our Style Scores system. Overall, both the top and bottom line outlooks make MercadoLibre an attractive growth play, with the added bonus of providing exposure to growing economies, fintech, and e-commerce.
Ichor Holdings, Ltd. posted a strong comeback in the first half of 2019, which saw it crush the overall semiconductor market’s climb. With that said, the company’s outlook for the rest of the year looks pretty brutal, after a rough first quarter of 2019, amid a broader chip industry downturn.
Quick Overview
Ichor designs, engineers, and manufactures critical fluid delivery subsystems and components for semiconductor capital equipment. The Fremont, California-based company’s offerings include gas and chemical delivery subsystems, which are vital parts of the process tools used to make semiconductor devices.
The semiconductor industry got a boost recently on the back of positive trade war-related news following the G-20 summit. The likes of Micron, Qualcomm and Intel have all reportedly resumed shipments of products to Huawei. Still, uncertainty is likely to remain in the historically cyclical chip market even though President Trump lifted part of the ban on the Chinese telecommunication powerhouse.
The fluid delivery subsystems firm saw its first quarter fiscal 2019 revenue plummet from $258 million in the year-ago period to $137.8, as part of a massive industry downturn. Meanwhile, its adjusted Q1 earnings slipped from $1.03 to $0.25 per share to fall just short of our quarterly estimate. Company executives were pleased with Q1 results, especially compared to larger industry declines in wafer fab equipment spending. Ichor expects similar revenue levels in the second quarter, with the top-line expected to come in stronger in the second half of the year.
Price Movement
Before we take a look ahead, it’s helpful to see how ICHR has performed. ICHR stock is up over 120% since going public in late 2016. As we mentioned, ICHR stock has soared over 40% in 2019, to outpace its industry’s 16% climb. But Ichor shares have underperformed the overall semiconductor market over the last two years, and slipped 6.19% during regular trading hours Monday to close at $22.88 a share.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for the company’s second quarter 2019 revenue to fall 44.6% to $137.87 million. Ichor’s Q3 revenue is projected to fall by just 11% to help the firm’s full-year fiscal 2019 revenue sink 27% to $604.2 million. The semiconductor industry is expected to bounce back in 2020 and Ichor’s revenue is expected to climb 26% above our 2019 estimate to reach $762.7 million, which would still come in far below 2018’s $824 million in revenues.
Meanwhile, the company’s adjusted second-quarter earnings are projected to plummet over 76% to $0.24 per share. Similar to the top line, ICHR’s slowdown is expected to be far less severe in the third quarter, with earnings expected to slip 32.7%.
Overall, the company’s fiscal 2019 EPS figure is projected to fall 55%. Peeking further ahead, Ichor’s bottom-line is projected to soar well above our 2019 estimate in 2020. Still, we can see just how much the company’s earnings estimates have fallen, especially for fiscal 2019 and 2020, over the past 90 days.
Bottom Line
Ichor is currently a Zacks Rank #5 (Strong Sell) based, in large part, on its negative earnings estimate revision activity. ICHR also rocks “D” grades across the board for Value, Growth, and Momentum in our Style Scores system, which means it might be a stock to avoid at the moment.
Deutsche Bank (DB - Free Report) Restructuring Plan Sends Shares Plummeting
Shares of Deutsche Bank fell well over 5% Monday, following the firm’s announcement Sunday of a major restructuring. The investment bank will cut around 18,000 jobs and exit the equities sales and trading business, which was previously a key source of revenues. The restructuring plan is an effort by CEO Christian Sewing to “become more profitable, improve shareholder returns and drive long-term growth.”
Once the largest bank in the world, Deutsche has been on a downward spiral over the past two years, with its stock down nearly 60%. The bank was the only one to fail last year’s “stress test” by the Fed, after failing in 2015 and 2016 as well. The firm did pass this year, which provided a significant boost to the stock, but the company is still far behind its peers. Meanwhile, U.S. competitors such as Citigroup and JPMorgan Chase passed the test with flying colors, prompting stock buybacks and dividend increases.
The restructuring hopes to allow Deutsche to focus on areas where it has had significant historical success. Deutsche is creating a new division, the “Corporate Bank.” This division will primarily serve Deutsche Bank and Postbank’s commercial and corporate clients. Deutsche expects the restructuring initiatives will allow the firm to grow its share as the market leader in German banking, especially with large German corporations. Deutsche has had historical success in this sector.
Along with changes to its business structure, multiple Deutsche board members are also leaving. Corporate and Investment Bank President Garth Ritchie will step down at the end of the month, but will continue advising the bank until the end of November. Additionally, Chief Regulatory Officer Sylvie Matherat and Management Board member Frank Strauss will step down at the end of the month. Meanwhile, Cristina Riley, Bernd Leukert and Stefan Simon will join the board.
The total cost of one-off charges for the restructure is expected to be EUR 7.4 billion ($8.3 billion) with EUR 5.1 ($5.72) billion coming in fiscal 2019 and EUR 3 billion ($3.37 billion) coming in Q2. Deutsche also gave updated Q2 guidance, which factored in restructuring costs. The firm now expects a net loss of EUR 2.8 billion ($3.14 billion) compared to positive EUR 120 million ($134.63 million) before restructuring expenses. Investors should note that Deutsche plans to officially release its Q2 earnings and revenue result on July 24.
Deutsche has failed to produce positive earnings in three out of the past four years and the restructuring plans may impact the company’s ability to post positive fiscal 2019 results. Deutsche Bank is currently a Zacks Rank #4 (Sell).
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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MercadoLibre, Ichor, Deutsche Bank, Citigroup and JPMorgan highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 9, 2019 – Zacks Equity Research MercadoLibre (MELI - Free Report) as the Bull of the Day, Ichor Holdings, Ltd. (ICHR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Deutsche Bank (DB - Free Report) , Citigroup (C - Free Report) and JPMorgan Chase (JPM - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
The company has been called the Amazon of Argentina and the eBay of Latin America. Shares of MercadoLibre have skyrocketed over 115% in 2019 alone. And the e-commerce powerhouse is set to expand, with a focus on digital and mobile payments. So let’s see why MELI stock is Tuesday’s Bull of the Day.
Business Overview
Buenos Aires, Argentina-based MercadoLibre’s website serves nearly 20 countries, with Brazil, Argentina, and Mexico by far its largest and most important markets. The company closed the first quarter of 2019 with 280 million registered users, up from 223 million in the prior-year quarter. Before we go any further, investors should note that Amazon and Alibaba currently have limited exposure in MercadoLibre’s biggest markets.
Last quarter, MercadoLibre saw its revenue soar 93% on an FX neutral basis and roughly 48% overall, with the big difference due to the strength of the U.S. dollar. Much of this jump was based on the power of the company’s payment platform, known as MercadoPago. Total payment volume topped the $5.5 billion mark for the first time, up 35% in USD and 82.5% on an FX neutral basis.
MercadoLibre said that its mobile wallet business reached four times the number of active payers in Q1 2019, with total payment volume in Argentina, Brazil, and Mexico pulling in triple digit growth year-over-year. The company also offers a broader suite of fintech products, which includes QR code in-store payments, mobile point of sale, and more.
The company will continue to invest heavily in its payment infrastructure and logistics in growing e-commerce markets, where some consumers still don’t have bank accounts. MercadoLibre’s expansion in digital payments comes as fintech proliferates from Square to big banks. Plus, in March the Latin American powerhouse announced that it would raise as much as $1.85 billion in a secondary stock offering, which included a $750 million strategic investment from PayPal. “Digital commerce in Latin America is experiencing tremendous growth and MercadoLibre is well-positioned for continued leadership,” PayPal CEO Dan Schulman said in prepared remarks.
Price Movement
Clearly, there seems to be a lot to be excited about in terms of MercadoLibre’s growth potential. And we can see that its revenues have soared in recent years, which has helped its stock price climb nearly 600% in the last five years. MELI stock is also up over 100% in the last 12 months and closed regular trading Monday at $629.97 per share, not too far off from its 52-week intraday highs of $672.55.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for the company’s second quarter 2019 revenue to surge 48.4% from the year-ago period to $497.58 million, with the strong U.S. dollar set to make MELI’s top-line growth appear weaker than it really is. MercadoLibre’s full-year fiscal 2019 revenue is projected to soar 50% to $2.15 billion. Peeking further down the road, the company’s 2020 revenue is expected to surge 39% higher than our current year estimate to hit $2.99 billion.
Until last quarter, the company had struggled to post positive adjusted earnings, as it spent heavily on expansion. With this in mind, MercadoLibre’s adjusted Q2 EPS figure is expected to climb from a loss of $0.25 in Q2 2018 to positive $0.28 per share. On top of that, the company’s full-year fiscal 2019 earnings are projected to skyrocket from a loss of $0.82 per share to +$1.16. Better still, the e-commerce firm’s adjusted 2020 EPS figure is expected to climb 181% higher than our 2019 estimate to $3.26 per share.
On top of this impressive bottom-line growth, we can see just how much more positive analysts have turned recently in terms of MELI’s earnings expectations. The company also blew by our quarterly earnings estimates in each of the last two periods by 533.33% and 66.67%, respectively.
Bottom Line
MercadoLibre’s recent earnings estimate revision strength helps it earn a Zacks Rank #1 (Strong Buy) right now. MELI also sports an “A” grade for Growth in our Style Scores system. Overall, both the top and bottom line outlooks make MercadoLibre an attractive growth play, with the added bonus of providing exposure to growing economies, fintech, and e-commerce.
Bear of the Day:
Ichor Holdings, Ltd. posted a strong comeback in the first half of 2019, which saw it crush the overall semiconductor market’s climb. With that said, the company’s outlook for the rest of the year looks pretty brutal, after a rough first quarter of 2019, amid a broader chip industry downturn.
Quick Overview
Ichor designs, engineers, and manufactures critical fluid delivery subsystems and components for semiconductor capital equipment. The Fremont, California-based company’s offerings include gas and chemical delivery subsystems, which are vital parts of the process tools used to make semiconductor devices.
The semiconductor industry got a boost recently on the back of positive trade war-related news following the G-20 summit. The likes of Micron, Qualcomm and Intel have all reportedly resumed shipments of products to Huawei. Still, uncertainty is likely to remain in the historically cyclical chip market even though President Trump lifted part of the ban on the Chinese telecommunication powerhouse.
The fluid delivery subsystems firm saw its first quarter fiscal 2019 revenue plummet from $258 million in the year-ago period to $137.8, as part of a massive industry downturn. Meanwhile, its adjusted Q1 earnings slipped from $1.03 to $0.25 per share to fall just short of our quarterly estimate. Company executives were pleased with Q1 results, especially compared to larger industry declines in wafer fab equipment spending. Ichor expects similar revenue levels in the second quarter, with the top-line expected to come in stronger in the second half of the year.
Price Movement
Before we take a look ahead, it’s helpful to see how ICHR has performed. ICHR stock is up over 120% since going public in late 2016. As we mentioned, ICHR stock has soared over 40% in 2019, to outpace its industry’s 16% climb. But Ichor shares have underperformed the overall semiconductor market over the last two years, and slipped 6.19% during regular trading hours Monday to close at $22.88 a share.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for the company’s second quarter 2019 revenue to fall 44.6% to $137.87 million. Ichor’s Q3 revenue is projected to fall by just 11% to help the firm’s full-year fiscal 2019 revenue sink 27% to $604.2 million. The semiconductor industry is expected to bounce back in 2020 and Ichor’s revenue is expected to climb 26% above our 2019 estimate to reach $762.7 million, which would still come in far below 2018’s $824 million in revenues.
Meanwhile, the company’s adjusted second-quarter earnings are projected to plummet over 76% to $0.24 per share. Similar to the top line, ICHR’s slowdown is expected to be far less severe in the third quarter, with earnings expected to slip 32.7%.
Overall, the company’s fiscal 2019 EPS figure is projected to fall 55%. Peeking further ahead, Ichor’s bottom-line is projected to soar well above our 2019 estimate in 2020. Still, we can see just how much the company’s earnings estimates have fallen, especially for fiscal 2019 and 2020, over the past 90 days.
Bottom Line
Ichor is currently a Zacks Rank #5 (Strong Sell) based, in large part, on its negative earnings estimate revision activity. ICHR also rocks “D” grades across the board for Value, Growth, and Momentum in our Style Scores system, which means it might be a stock to avoid at the moment.
Deutsche Bank (DB - Free Report) Restructuring Plan Sends Shares Plummeting
Shares of Deutsche Bank fell well over 5% Monday, following the firm’s announcement Sunday of a major restructuring. The investment bank will cut around 18,000 jobs and exit the equities sales and trading business, which was previously a key source of revenues. The restructuring plan is an effort by CEO Christian Sewing to “become more profitable, improve shareholder returns and drive long-term growth.”
Once the largest bank in the world, Deutsche has been on a downward spiral over the past two years, with its stock down nearly 60%. The bank was the only one to fail last year’s “stress test” by the Fed, after failing in 2015 and 2016 as well. The firm did pass this year, which provided a significant boost to the stock, but the company is still far behind its peers. Meanwhile, U.S. competitors such as Citigroup and JPMorgan Chase passed the test with flying colors, prompting stock buybacks and dividend increases.
The restructuring hopes to allow Deutsche to focus on areas where it has had significant historical success. Deutsche is creating a new division, the “Corporate Bank.” This division will primarily serve Deutsche Bank and Postbank’s commercial and corporate clients. Deutsche expects the restructuring initiatives will allow the firm to grow its share as the market leader in German banking, especially with large German corporations. Deutsche has had historical success in this sector.
Along with changes to its business structure, multiple Deutsche board members are also leaving. Corporate and Investment Bank President Garth Ritchie will step down at the end of the month, but will continue advising the bank until the end of November. Additionally, Chief Regulatory Officer Sylvie Matherat and Management Board member Frank Strauss will step down at the end of the month. Meanwhile, Cristina Riley, Bernd Leukert and Stefan Simon will join the board.
The total cost of one-off charges for the restructure is expected to be EUR 7.4 billion ($8.3 billion) with EUR 5.1 ($5.72) billion coming in fiscal 2019 and EUR 3 billion ($3.37 billion) coming in Q2. Deutsche also gave updated Q2 guidance, which factored in restructuring costs. The firm now expects a net loss of EUR 2.8 billion ($3.14 billion) compared to positive EUR 120 million ($134.63 million) before restructuring expenses. Investors should note that Deutsche plans to officially release its Q2 earnings and revenue result on July 24.
Deutsche has failed to produce positive earnings in three out of the past four years and the restructuring plans may impact the company’s ability to post positive fiscal 2019 results. Deutsche Bank is currently a Zacks Rank #4 (Sell).
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.