Stock Analysis
Momentum
US

MercadoLibre (MELI:NASDAQ)

13 Nov 2020
By
MercadoLibre Inc. operates the largest online commerce and payment ecosystem in Latin America. The company’s focus is on enabling e-commerce and digital/mobile payments across 18 countries.
Key Statistics
52-Week RangeAvg. Daily Vol (3 Mo)Market ValueDividend YieldFloat %Target PriceConsensus Rating
(5 strong buy – 1 strong sell)
Next Earnings Announcement
422.22 – 1490.66520,60664,749.995,4%1,446.714.2910/02/2021

 

MercadoLibre Inc. operates the largest online commerce and payment ecosystem in Latin America. The company’s focus is on enabling e-commerce and digital/mobile payments across 18 countries.

The company operates six main segments, MercadoLibre, MercardoEnvios, MercadoCredito, MercadoShops, MercadoPago and MercadoLibre Publicidad. MercadoLibre is a marketplace that allows business and individuals to list merchandise, conducting purchases and sales on either a fixed or auction-based price. Sellers pay a commission on successful transactions based on a percentage of the items value, or gross merchandise value (GMV). Envios is a shipping solution, offering cost-efficient integration with existing logistics carriers to sellers on the marketplace. Credito provides credit solutions, facilitating loans to both consumers and merchants on the marketplace. Shops offers an easy way to create an online store, where sellers pay for setup and ongoing maintenance. Publicidad is an advertising platform that enables small, medium and large retailers and consumer brands to promote their products and services, generating fees through cost-per-click and cost-per-mile basis. Pago offers payment solutions, to facilitate transactions both on and off the marketplace, allowing users to securely send and receive payments online in Argentina, Brazil, Mexico, Colombia, Chile, Uruguay and Peru.

In 2020 the company has seen outsized growth due to the COVID-19 pandemic driving a shift to online shopping. MercadoPago now generates half of the revenue as consumer switch from physical cash payments to using digital wallets and contactless payments. Adjusted revenue is forecast to rise +64.2% in 2020 to $3,770.2m and a further +40.2% in 2021 to $5,286.2 as the company has benefited from accelerating sales having reduced delivery times through its managed logistics and reduced past due loans within the Credito segment. Adjusted earnings per share is forecast to rise +136% from the last twelve months to $1.35 and a further +120% to $2.972 in 2021. That sees the stock trading on forward P/E multiples of 963.2 and 437.7 respectively, heavy premiums to peer’s which trade on an average of 37.9 and 28.4 respectively.

The average target price of analysts covering the stock is $1,446.71 with 67% of analysts rating the stock as a buy, compared to 4% as a sell and 29% as a hold.

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