Why MercadoLibre’s A+ Growth Metrics Make It a Rare Buy Opportunity Even at a #3 Zacks Rank

In a world where short-term volatility often overshadows long-term potential, MercadoLibre (MELI) presents a compelling paradox: a company with A-rated growth prospects and a B VGM Score—signals of exceptional scalability and momentum—currently carries a Zacks Rank #3 (Hold). For growth investors willing to look past the noise, this disconnect creates a rare entry point into one of Latin America’s most dominant digital ecosystems. Let’s dissect why MELI’s fundamentals scream buy, even as its near-term ranking suggests caution.

Dominant Position in a Booming Market

MercadoLibre is the Amazon of South America, dominating e-commerce, fintech, and logistics across Brazil, Argentina, Mexico, and beyond. Its 28% YoY growth in GMV (Gross Merchandise Volume) and 43% YoY TPV (Total Payment Volume) growth in Q1 2025 underscore its grip on a region where digital adoption is exploding. With 64.3 million monthly active users on its Mercado Pago platform and 69% storage attachment rates for solar services, MELI is not just a retailer—it’s a full-stack ecosystem owning payments, logistics, and even energy solutions.

Growth Metrics That Shatter the #3 Zacks Rank

While the Hold ranking reflects near-term concerns like valuation and seasonal Q1 weakness, Zacks’ Style Scores paint a vastly different picture:

1. A Growth Score (27.1% Earnings Growth):
   MELI’s projected 27.1% earnings growth for 2025 blows past peers, fueled by:
2. Scalable fintech: Mercado Pago’s 31% YoY user growth and credit portfolio expansion (up 75% YoY).
3. 1P GMV dominance: First-party inventory sales surged >100% YoY in key categories like groceries and electronics.

4. Cross-border expansion: Texas-to-Argentina drop-shipping reduces reliance on local supply chains, unlocking untapped markets.

5. B VGM Score: Value, Growth, and Momentum in Tandem
   Despite a D Value Score (due to a premium 4.15X P/S ratio), the B VGM Score highlights momentum that can’t be ignored:

6. 937.8% cash flow growth over 3-5 years, with 67.3% YoY growth projected in 2025.
7. Strong earnings surprises: A 16.4% average beat over the past four quarters, including a 73.7% surprise in Q1 2025.

Why the #3 Rank is a Buying Opportunity

The Hold ranking hinges on two factors:
1. Valuation headwinds: MELI trades at a premium to its Internet-Commerce sector peers, but this is justified by its growth tailwinds.
2. Seasonal Q1 softness: Historically the weakest quarter due to post-holiday lulls, yet MELI still delivered 37% YoY revenue growth in Q1 2025.

Investors should focus on three critical positives:
- Upward earnings revisions: 7 analysts raised 2025 EPS estimates in 60 days, boosting consensus to $47.92/share.
- Margin expansion: Operating margins hit 12.9% in Q1, up 70 bps YoY, proving scale efficiency.
- Strategic reinvestment: Negative FCF (12.8% margin) reflects long-term bets, not weakness—think logistics automation and fintech R&D.

The Case for Immediate Action

The Zacks Rank is a lagging indicator, while Style Scores and cash flow metrics are forward-looking. Here’s why MELI is a buy now:
- Growth vs. valuation: A 4.15X P/S ratio may seem high, but compare it to Amazon’s 1.3X P/S—MELI’s emerging market dominance and untapped fintech upside justify the premium.
- Earnings surprise machine: A 16.4% average beat suggests analysts are consistently underestimating its potential.
- Decisive leadership: CEO Marcos Galperín’s focus on “grow-fit, not grow-fast” ensures investments in high-margin adjacencies like solar and digital banking.

Final Call: Buy MELI While the Market Doubts

MercadoLibre’s A Growth Score and B VGM Score are votes of confidence in its ability to navigate short-term headwinds. The #3 Zacks Rank is a speed bump in a race to capture $100B+ opportunities in Latin America’s digital economy. For investors prioritizing sustainable growth over near-term rankings, MELI offers a once-in-a-decade chance to own a category leader at a price that still reflects 2023’s volatility.

Act now—before the market catches up.

Data as of May 2025. Past performance does not guarantee future results.