Let’s see the evolution of your sales and net profits in the last quarters:
Sales increased 66.5% year-on-year, totaling USD 1.9 billion, higher than expected. Making the breakdown, the commercial sector took 65% of the total and the Fintech sector the remaining 35%. Net profit was USD 95M, a record for MELI.
Mercado Pago: the star
Its Fintech sector (Mercado Pago) is clearly the greatest potential, and even more so considering the scarce financial inclusion that Latin America has. It has a great flow due to the fact that they charge commissions in several situations:
– Transactions outside the Marketplace platform
– Buyer chooses to pay in installments
– Seller takes out cash
– Cash advances
– Commercial and consumer loans (Credit Market)
I leave you the sales generated by this sector and its year-on-year growth during the last 5 quarters:
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This quarter this sector was a record in terms of sales generated, with an annual growth rate that, despite having fallen slightly, remains very high.
Argentina valuation and risk
MELI currently has a market capitalization of USD 80,000M. This value represents more than 10 times your sales, which always meant an astronomical valuation, except in the unusual times in which we live.
Mercado Libre is an Argentine company, but it has less and less exposure in our country. It is present in 18 other Latin American countries, with Brazil and Mexico being the most important.
This is something that the market values, since a lower proportion of Argentine risk is something to celebrate, given the reality that the country is experiencing.
While profits in Argentina grew only 33% year-on-year, in Brazil and Mexico they increased 74% and 94%, respectively. That MELI is more and more a Latin American company and that “less and less Argentina” gives it greater strength.
How did the action go?
Let’s see the evolution of its share price:
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So far this year, the company’s shares have accumulated a fall of 2.74%. This should attract attention with an S & P500 index already racking up 25%.
So why didn’t the market push up the value of the company? One possible answer may be that all the good news (including the sales growth outlook) is already reflected in the current valuation.
The right question would be: why should someone buy if the market is not enthusiastic?
Finally, I want to invite you to download a free report that I prepared with three simple secrets to discover winning stocks and have interesting returns. I honestly think that it will help you a lot to be able to analyze companies with potential, it is not wasted. You can download it at this link: Financial Letter – winning actions.
Source From: Ambito
