MercadoLibre Q4 Earnings Preview: To Buy or Not to Buy the Stock?

Core Viewpoint - MercadoLibre is expected to report strong revenue and earnings growth for the fourth quarter of 2024, with revenues estimated at $5.84 billion, reflecting a 37.11$7.26, indicating a 123.8% jump from the previous year [1]. Financial Estimates - The Zacks Consensus Estimate for fourth-quarter revenues is $5.84 billion and for earnings is$7.26 per share, with no changes in estimates over the past 30 days [1][2]. - The consensus estimate for gross merchandise volume is $14.7 billion, total payments volume is$59.79 billion, and the number of successful items sold is pegged at 505 million [10]. Earnings Surprise History - MercadoLibre has a mixed earnings surprise history, with a negative surprise of 30.52% in the last quarter and an average negative surprise of 14.86% over the last four quarters [2]. Key Growth Factors - The company's logistics network has been strengthened with the addition of six new fulfillment centers, which is expected to enhance delivery capabilities and customer experience, although it may pressure margins in the short term [5]. - The fintech segment, particularly Mercado Pago, is anticipated to continue its growth trajectory, with credit card total payment volume (TPV) growing 166% year-over-year [6]. - The revamped loyalty program, MELI+, is expected to drive user engagement and retention, although its impact on margins is a concern [7]. Market Conditions - Macroeconomic conditions in key markets, especially Brazil and Argentina, are crucial to monitor as they may affect consumer behavior and credit performance [8]. - Despite strong operational momentum, near-term margin pressures and macroeconomic uncertainties suggest a cautious approach for investors [18]. Stock Performance and Valuation - MercadoLibre shares have gained 19.3% over the past year, underperforming compared to the Zacks Retail-Wholesale sector and the S&P 500 index [11]. - The current trailing 12-month price-to-sales (P/S) ratio is 4.11X, significantly higher than the industry average of 1.91X, indicating a stretched valuation [14]. Investment Outlook - The company presents a compelling long-term growth story in Latin American e-commerce and fintech, but investors may want to hold current positions or wait for a better entry point ahead of the fourth-quarter results [17][18].