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What's in the Cards for MercadoLibre's (MELI) Q4 Earnings?

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MercadoLibre, Inc. (MELI - Free Report) is set to report fourth-quarter 2019 results on Feb 10.

For the fourth quarter, the Zacks Consensus Estimate for sales is pegged at $669.79 million, indicating growth of 56.49% from the prior-year quarter.

Further, the consensus mark is pegged at a loss per share of 55 cents compared with a loss of 5 cents reported in the year-ago quarter.

In the last reported quarter, MercadoLibre had reported loss of 97 cents per share missing the Zacks Consensus Estimate for earnings of 1 cent per share. Notably, the company reported a loss of 23 cents per share in the year-ago quarter.

Revenues improved 10.6% sequentially and 69.7% on a year-over-year basis (90.5% on an FX neutral basis) to $603 million. However, the figure missed the Zacks Consensus Estimate of $605 million.

MercadoLibre, Inc. Price and EPS Surprise


MercadoLibre, Inc. Price and EPS Surprise

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

Factors to Consider

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 to-be-reported quarter.

Further, robust free shipping program is anticipated to have to helped the company in delivering better shopping experience to customers during the fourth quarter. Moreover, it is likely to have driven shipment growth via MercadoEnvios in the quarter under review.

Additionally, strong investments on MercadoLibre’s logistics business are expected to have aided the performance of its delivery system in the to-be-reported quarter. Moreover, expanding managed logistics network is likely to have benefited the performance of the business.

Furthermore, the company’s strengthening online-to-offline offerings are expected to have contributed to the fourth-quarter performance.

Moreover, its growing initiatives toward strengthening fintech business are likely to have driven the total payment volumes (TPV) in the fourth quarter.

Robust MPOS services are expected to have bolstered the transactions per unique active device in the fourth quarter. Strong devices – Point Pro and Point Mini are expected to have aided the company’s device sales growth in the quarter under review.

Further, strong wallet services are anticipated to have boosted the company’s in-store QR payments volume during the fourth quarter.

All these factors are likely to have aided MercadoLibre’s fourth-quarter performance.

However, increasing warehousing cost of managed network and expenses related to infrastructure transition on public clouds are likely to have impacted the company’s profitability. Moreover, costs related to free shipping subsidies and discounts on mPOS devices are expected to have weighed on margin expansion in the quarter under review.

Additionally, rising inventory cost of the company thanks to increasing sales of mPOS devices, and rising branding and marketing initiatives are likely to have hurt fourth-quarter margins.

What Our Model Says

Our proven model doesn’t conclusively predict 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 0.00% and a Zacks Rank #2.

Stocks to Consider

Here are some stocks you may consider, as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Alteryx, Inc. (AYX - Free Report) has an Earnings ESP of +6.49% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Materials, Inc. (AMAT - Free Report) has an Earnings ESP of +2.89% and a Zacks Rank of 1.

Bruker Corporation (BRKR - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #2.

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