MercadoLibre Set to Report Q3 2024 Results: Insights and Expectations

MercadoLibre MELI is set to announce its third-quarter 2024 results on November 6. 

Strong Revenue Growth Expected

For the third quarter, the Zacks Consensus Estimate for revenues stands at $5.25 billion, indicating a substantial increase of 39.73% from the same quarter last year.

The projected earnings for the third quarter are estimated at $11.27 per share, suggesting a remarkable jump of 57.4% compared to the year-ago figure. Interestingly, this estimate has remained unchanged over the past month.

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Check out the latest EPS estimates and surprises on the Zacks Earnings Calendar.

Earnings Surprise History Reviewed

MercadoLibre’s earnings surprise history has been mixed. In the last reported quarter, it delivered an earnings surprise of 20.18%. The company has beaten the Zacks Consensus Estimate in three of the past four quarters, while missing once, with an average negative surprise of 1.63%.

MercadoLibre, Inc. Price and EPS Surprise

MercadoLibre, Inc. price and EPS surprise | MercadoLibre, Inc. Quote

Earnings Predictions

Current assessments do not strongly indicate that MercadoLibre will achieve an earnings beat this quarter. Typically, a positive Earnings ESP combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) enhances the likelihood of exceeding earnings expectations. However, MercadoLibre’s Earnings ESP stands at -24.24%, and it currently holds a Zacks Rank of #2.

Factors Impacting Q3 Performance

MercadoLibre’s primary e-commerce operations are anticipated to show robust growth for the third quarter, propelled by various strategic initiatives. The company’s focus on enhancing brand loyalty and customer programs likely contributed to a larger unique buyer base during this period. The integration of online-to-offline offerings, especially in Brazil, along with improved first-party services, appears to have strengthened marketplace performance.

Noteworthy growth is expected in product categories such as fashion, electronics, apparel, and sports, owing to effective product diversification efforts. Significant investments in logistics infrastructure, aimed at enhancing delivery efficiency and customer experience, could further support shipment growth. The Zacks Consensus Estimate for commerce revenues reaches $3.15 billion, signaling a year-over-year increase of 48.2%.

The advertising segment also shows potential for growth, benefiting from recent technical advancements, including an automated ad buying platform that enhances analytics and bidding strategies. These innovations are likely to positively impact advertising revenue in the third quarter.

In its fintech division, Mercado Pago remains a key growth driver, spurred by increased credit card usage and a broader range of product offerings. The Zacks Consensus Estimate for fintech revenues is $2.22 billion, reflecting a year-over-year increase of 36.6%.

In summary, while strong performance is anticipated across e-commerce, logistics, advertising, and fintech sectors for the third quarter, actual results will hinge on the effective execution of these initiatives.

Growth Estimates for Essential Metrics

The Zacks Consensus Estimate for gross merchandise volume is pegged at $12.79 billion, suggesting a growth of 12.6% from last year.

The consensus for total payments volume is projected at $49.23 billion, indicating a year-over-year increase of 4.2%.

Additionally, the expected number of successful items sold is 430 million—up 20.4% from the previous year—while successful shipments are expected to reach 426 million, marking a 21.7% rise.

Market Performance and Valuation Analysis

MercadoLibre’s stock has gained 30.8% since the beginning of the year, outperforming the Zacks Retail-Wholesale sector and the S&P 500, which logged returns of 20.8% and 20.5%, respectively.

However, the company has not performed as well as major competitors including Amazon AMZN and Walmart WMT, which have seen their shares rise 30.9% and 56.4% year-to-date.

Year-to-Date Performance Snapshot

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Evaluating the current value of MercadoLibre for investors reveals some interesting aspects. Currently, MELI trades at a premium with a trailing 12-month P/S ratio of 4.26X, compared to the Zacks Internet – Commerce industry’s 1.7X. This indicates a stretched valuation at this time.

MELI’s Stretched Valuation Insights

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Investment Consideration

MercadoLibre’s investment profile reveals a mixed outlook. On one hand, the e-commerce growth potential in Latin America is strong, driven by the company’s leading market positions in Brazil, Mexico, and Argentina, along with the expanding Mercado Pago platform and innovative advertising solutions. On the other hand, challenges loom large, including economic instability in Argentina, rising operational costs, and growing competition from global giants such as Amazon and Walmart in the Mexican market. While high inflation and increasing expenses press on profit margins, MercadoLibre’s established presence and revenue diversification in both e-commerce and fintech offer a stabilizing advantage in this competitive landscape.