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What's in the Cards for MercadoLibre (MELI) in Q2 Earnings?

Zacks Equity Research

MercadoLibre, Inc. MELI is set to report second-quarter 2019 results on Aug 7.

The company topped the Zacks Consensus Estimate in two of the trailing four quarters, with an average positive surprise of 112.74%.

Past-Quarter Performance

In the last reported quarter, MercadoLibre had reported earnings of 13 cents per share against the Zacks Consensus Estimate of a loss of 1 cent. Notably, the company reported a loss of 29 cents in the year-ago quarter.

Revenues increased 16.5% on a year-over-year basis (92.9% on an FX neutral basis) to $473.8 million, surpassing the Zacks Consensus Estimate of $412.7 million. The top line was driven by the company’s strong performance by MercadoPago and MercadoEnvios.

Q2 Estimates

For the second quarter, the Zacks Consensus Estimate for earnings is pegged at 28 cents per share. Further, the consensus mark for revenues is projected at $497.58 million.

Let’s see how things are shaping up prior to this quarter.

MercadoLibre, Inc. Price and EPS Surprise

 

MercadoLibre, Inc. Price and EPS Surprise
MercadoLibre, Inc. Price and EPS Surprise

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

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Factors to Consider

MercadoLibre’s strengthening key offerings, especially online-to-offline offerings will continue to aid the top line in the to-be-reported quarter.

Further, its growing initiatives toward strengthening fintech business are major positives. Moreover, increasing adoption of MercadoPago on the back of well-performing merchant services and mobile wallet business is expected to drive the company’s total payment volume in the second quarter.

Additionally, rising installation rate of the company’s MPOS devices remains encouraging.

Furthermore, MercadoLibre’s robust free shipping program continues to aid in delivering better shopping experience. Moreover, it is likely to aid the company’s shipment growth via MercadoEnvios, which in turn will the upcoming quarterly results.

Moreover, increasing investment by the company on its logistics services is expected to aid the performance of its delivery system in the quarter under review.

All these factors are likely to benefit MercadoLibre’s results in the second quarter.
However, increasing expenses related to warehousing, infrastructure transition on public clouds, free shipping subsidies and discounts on mPOS devices remain major concerns for the company’s margin expansion.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

MercadoLibre has a Zacks Rank #3 but an Earnings ESP of 0.00%, which makes the surprise prediction difficult.

Stocks to Consider

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

Clearway Energy CWEN has an Earnings ESP of +15.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

JD.com JD has an Earnings ESP of +17.86% and a Zacks Rank #2.

Ciena CIEN has an Earnings ESP of +5.26% and a Zacks Rank #2.

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JD.com, Inc. (JD) : Free Stock Analysis Report
 
MercadoLibre, Inc. (MELI) : Free Stock Analysis Report
 
Ciena Corporation (CIEN) : Free Stock Analysis Report
 
Clearway Energy, Inc. (CWEN) : Free Stock Analysis Report
 
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Zacks Investment Research