Why Mercadolibre (MELI) Is Surging Today

NEW YORK (TheStreet) -- Mercadolibre  (MELI) was surging 13.1% to $106.57 at 1:44 p.m. EST on Friday after the Latin American e-commerce Web site announced fourth-quarter results that beat analysts' expectations.

The company reported earnings per share of 93 cents, up from 69 cents in the same period one year earlier. Revenue also increased 29.7% to $134.6 million. These figures surpassed the consensus estimate of 78 cents on revenue of $133.23 million.

Stifel Nicolaus upgraded Mercadolibre to "buy" from "sell" on Friday after the company released its results.

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TheStreet Ratings team rates MERCADOLIBRE INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MERCADOLIBRE INC (MELI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 26.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although MELI's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
  • MERCADOLIBRE INC has improved earnings per share by 11.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MERCADOLIBRE INC increased its bottom line by earning $2.30 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $2.30).
  • Net operating cash flow has significantly increased by 152.53% to $63.69 million when compared to the same quarter last year. In addition, MERCADOLIBRE INC has also vastly surpassed the industry average cash flow growth rate of 12.06%.
  • The gross profit margin for MERCADOLIBRE INC is currently very high, coming in at 74.80%. Regardless of MELI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MELI's net profit margin of 23.79% compares favorably to the industry average.
  • You can view the full analysis from the report here: MELI Ratings Report

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