Here's Why MercadoLibre (MELI) Fell More Than Broader Market

In the latest close session, MercadoLibre (MELI) was down 4.86% at $1,680.27. The stock's change was less than the S&P 500's daily loss of 1.52%. At the same time, the Dow lost 1.56%, and the tech-heavy Nasdaq lost 1.78%.

The stock of operator of an online marketplace and payments system in Latin America has fallen by 12.49% in the past month, lagging the Retail-Wholesale sector's loss of 1.95% and the S&P 500's loss of 2.25%.

Analysts and investors alike will be keeping a close eye on the performance of MercadoLibre in its upcoming earnings disclosure. The company's earnings per share (EPS) are projected to be $11.11, reflecting a 14.07% increase from the same quarter last year. Meanwhile, the latest consensus estimate predicts the revenue to be $8.42 billion, indicating a 41.94% increase compared to the same quarter of the previous year.

For the full year, the Zacks Consensus Estimates project earnings of $55.59 per share and a revenue of $38.29 billion, demonstrating changes of +41.09% and +32.52%, respectively, from the preceding year.

It is also important to note the recent changes to analyst estimates for MercadoLibre. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 6.54% lower. Right now, MercadoLibre possesses a Zacks Rank of #3 (Hold).

Digging into valuation, MercadoLibre currently has a Forward P/E ratio of 31.77. This valuation marks a premium compared to its industry average Forward P/E of 15.81.

Also, we should mention that MELI has a PEG ratio of 0.94. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. By the end of yesterday's trading, the Internet - Commerce industry had an average PEG ratio of 0.92.

The Internet - Commerce industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 154, which puts it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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