This miercoles por la noche -- Wednesday night, for us Anglophiles -- we're getting a first-quarter earnings report all the way from Argentina. It's MercadoLibre (Nasdaq: MELI), the biggest online auction outfit in Latin America, and this Fool has swapped his jingly cap for a gaucho hat to prepare for the report.
What Fools say:
Here's how MercadoLibre's CAPS rating stacks up against some of its peers and competitors:
|
Market Cap (millions)
|
Trailing P/E Ratio
|
CAPS Rating
|
|
eBay (Nasdaq: EBAY)
|
$35,130
|
102.6
|
***
|
|
Amazon.com (Nasdaq: AMZN)
|
$26,130
|
55.8
|
**
|
|
Mercadolibre
|
$1,660
|
204.2
|
****
|
|
Gmarket (Nasdaq: GMKT)
|
$1,130
|
32.4
|
****
|
|
Liquidity Services (Nasdaq: LQDT)
|
$264
|
24.0
|
***
|
Data taken from Motley Fool CAPS and Yahoo! Finance on 03/03/2008.
Marching ahead of the pack, shoulder-to-shoulder with South Korean counterpart Gmarket, the company shows us the appeal of localized auction houses -- Rioplatense villas and Joseon pagodas alike.
Simply put, the CAPS bulls on this stock see the early days of eBay playing out all over again, and predict a similar skyrocketing business trajectory. The 'Bay or Amazon are mentioned many times over as prospective buyers of the whole company, and it's also a way to tap into the rampant growth we're seeing out of Latin America these days.
The bears point to (surprise!) unreasonable valuation -- even after a 54% price cut in the last two months.
What management does:
The operating margin trend is the real story here. The company is accelerating the share of operating profits quarter by quarter, while doing the same in sales growth.
|
Margins
|
6/2006
|
9/2006
|
12/2006
|
3/2007
|
6/2007
|
9/2007
|
|
Gross
|
78.3%
|
78.3%
|
76.8%
|
77.2%
|
77.4%
|
77.6%
|
|
Operating
|
2.9%
|
2.9%
|
10.4%
|
13.1%
|
16.9%
|
21.3%
|
|
Net
|
8.3%
|
8.3%
|
2.1%
|
3.4%
|
5.4%
|
8.4%
|
|
FCF/Revenue
|
7%
|
7%
|
7.8%
|
12.6%
|
11.2%
|
10.1%
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
Any Fool would relish the chance to get in on the next eBay in its early growth stages. For its leading market position in a high-margin business with powerful network effects, MercadoLibre made a spirited run for the title of best international stock for 2008, but eventually lost out to Cemex (NYSE: CX) and Sadia (NYSE: SDA). Nothing much has changed since then -- after all, the vote ended just three weeks ago. MercadoLibre is still a brilliant little company with oceans of growth ahead of it.
Will it be enough to justify the lofty stock price? It's hard to tell with such a short operating history, but Mercado does have the expertise of its more than 10% ownership by eBay to fall back on. Patience is a virtue, Fool.
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