U.S. Markets open in 8 hrs 29 mins
  • Gold

    1,789.80
    -3.60 (-0.20%)
     
  • EUR/USD

    1.1609
    +0.0007 (+0.0580%)
     
  • 10-Yr Bond

    1.6190
    0.0000 (0.00%)
     
  • Vix

    15.98
    +0.74 (+4.86%)
     
  • GBP/USD

    1.3775
    +0.0012 (+0.0840%)
     
  • USD/JPY

    114.0000
    -0.1290 (-0.1130%)
     
  • BTC-USD

    61,187.76
    -1,274.85 (-2.04%)
     
  • CMC Crypto 200

    1,489.71
    -15.44 (-1.03%)
     
  • FTSE 100

    7,277.62
    +54.80 (+0.76%)
     
  • Nikkei 225

    28,959.78
    -146.22 (-0.50%)
     

Why MercadoLibre (MELI) Might be Well Poised for a Surge

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

MercadoLibre (MELI) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this operator of an online marketplace and payments system in Latin America, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For MercadoLibre, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.84 per share for the current quarter, which represents a year-over-year change of +200%.

The Zacks Consensus Estimate for MercadoLibre has increased 1427.27% over the last 30 days, as four estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $1.89 per share, representing a year-over-year change of +2462.5%.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, four estimates have moved up for MercadoLibre versus no negative revisions. This has pushed the consensus estimate 851.57% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, MercadoLibre currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for MercadoLibre have attracted decent investments and pushed the stock 15.1% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MercadoLibre, Inc. (MELI) : Free Stock Analysis Report

To read this article on Zacks.com click here.