MercadoLibre is the IBD Stock Of The Day, as the largest e-commerce company in Central and South America soundly beat fourth-quarter earnings estimates and continues to gain momentum. MELI stock is hovering in a buy zone.
Based in Buenos Aires, Argentina, MercadoLibre in its own backyard has a big leg up on industry behemoth Amazon.com.
MercadoLibre reported fourth-quarter results late Thursday. Adjusted earnings of $3.28 a share beat consensus estimates from analysts polled by Zacks of $2.49. That compares with a loss of 92 cents in the year-ago period.
Revenue of $3 billion narrowly beat expectations, jumping 41%. Further, on a foreign-exchange neutral basis, revenue surged 56.5%, the company said. Gross merchandise volume processed by MercadoLibre climbed 35%.
MELI stock climbed 1.8% to close at 1,156.88 on the stock market today.
Two Buy Points For MELI Stock
In late January, MELI stock surged past a buy point of 1,095.44 out of a consolidation. That remains the old, technically valid entry. Meanwhile, a new entry is available at 1,142.34, which would break the trendline of a high handle off a bottoming base. But market action overall raises the risk.
The bulk of company revenue comes from Argentina, Brazil and Mexico. The remainder comes from Colombia, Costa Rica, Chile, Venezuela and Ecuador, among other countries. In total, MercadoLibre operates in 18 countries.
In addition to providing an e-commerce marketplace for buyers and sellers — with its 148 million active users — MercadoLibre hosts platforms where users can create online stores.
Its financial business, called Mercado Pago, allows users to make contactless payments, pay utility bills, make peer-to-peer transactions and pay for transportation tickets, among other things. It has more than 44 million users.
Fresh Records Despite Uncertainty
"We've successfully navigated a challenging environment, and we've reached new records across the business despite uncertainty around consumer spending, interest rates and inflation," Chief Financial Officer Pedro Arndt said in a conference call with analysts after the earnings report.
"We're particularly pleased to have been able to deliver an attractive combination of growth and profitability throughout the year," Arndt said.
The IBD Stock Checkup tool shows that MELI stock has a best-possible IBD Composite Rating of 99.
Shares have Relative Strength Rating at 92. MELI stock is a member of the elite IBD 50 growth stock list as well as IBD's Tech Leaders.
Shares rank first in IBD's Retail-Internet industry group. Also, China e-commerce giant Pinduoduo is second. Shutterstock ranks No. 3, followed by Etsy.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
