mercadolibre (Meri – (Free Report) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
Shares of the operator of online marketplaces and payment systems in Latin America returned -13.2% over the past month versus +2.7% for the Zacks S&P 500 Composite Index. The Zacks Internet Commerce industry, which includes MercadoLibre, has gained 1.6% in this period. The key question here is where the stock is likely to go in the short term.
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
For the current quarter, MercadoLibre is expected to post earnings of $7.01 per share, representing a year-over-year change of +76.6%. The Zacks Consensus Estimate has changed -2.9% over the past 30 days.
The current fiscal year consensus earnings estimate of $34.85 represents a +79.1% change from the prior year. This estimate has changed -0.8% over the past 30 days.
Next year's consensus earnings estimate of $50.26 represents a +44.2% change from the earnings MercadoLibre was expected to report a year ago. Over the past month, the forecast has changed by -1.1%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to earnings expectations, has given MercadoLibre a Zacks Rank of #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Expected revenue growth rate
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
For MercadoLibre, the current quarter's consensus revenue estimate of $3.94 billion represents a year-over-year change of +29.9%. Forecasts of $17.81 billion and $21.68 billion for the current and next fiscal year represent changes of +23.1% and +21.7%, respectively.
Last reported results and surprising details
MercadoLibre reported revenue of $4.26 billion in its last reported quarter. This represents a +41.9% year-over-year change. EPS for the same period was $3.25, compared to $3.25 for the same period last year.
The reported earnings are a surprise of +2.83% when compared to the Zacks Consensus Estimate of $4.14 billion. EPS surprise was -51.2%.
Over the last four quarters, MercadoLibre has surpassed consensus EPS estimates three times. The company has surpassed consensus revenue estimates every time during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
The present value of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters can help you see if it is overvalued, overvalued or undervalued, but how reasonable its stock is You can get a good idea of what
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
MercadoLibre is rated C on this score, indicating it trades on par with its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding MercadoLibre is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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