Wednesday, November 12, 2008

Mercadolibre (MELI) with Good Earnings

In our continuing series "stocks with good fundamentals that sell off every week, and we cannot own because of said selling" today we bring you Mercadolibre (MELI). With a market cap now under $500M I am gobsmacked (like that? UK newspaper reading has some benefits) no one is coming in and buying the best entry into Latin America internet. It's a cheap price for a quick way to leverage into an under penetrated portion of the globe. We closed our position here in early August in the... err... $35s. Now it's touching $10.

Until the day comes (if it comes) of a takeover we'll keep up with how they are doing each quarter. Analysts at $38M and $0.12 EPS. This has never been a cheap stock but after this thrashing is down to about a 25x forward multiple. But we get 70%ish revenue growth, nearly 80% gross margins, operating income growth in the 80%ish range, net income growth over 100% etc. No major debt.
  • MercadoLibre reported consolidated net revenue for the three months ended September 30, 2008 of $40.3 million, a quarterly year over year revenue growth rate of 76.6%.
  • Third quarter marketplace revenue grew 75.0% to $31.7 million from $18.1 million for the prior year third quarter. Payments revenues grew to $8.5 million for the third quarter, up 82.9% from $4.7 million for the same period during 2007.
  • Revenue growth was primarily driven by 49.4% and 87.0% growth over the same period during the prior year in gross merchandise volume and total payment volume respectively. Strong results in the classifieds and ad sales businesses as well as take-rate improvements during the quarter also contributed to revenue growth for the quarter.
  • Gross profit grew 79.2% to $32.1 million from $17.9 million in the prior year third quarter. Gross profit margin improved to 79.7% from 78.6% in the third quarter of 2007.
  • Income from operations grew 85.4% to $11.7 million from $6.3 million for the same period during 2007. Excluding certain long-term retention plan costs, income from operations would have grown 88.9% to $11.9 million.
  • Net income for the three-month period ended September 30, 2008 was $5.9 million, compared to $2.8 million during the same period of 2007, an increase of 110.9%.
  • Earnings per share for the third quarter of 2008, both basic and diluted, were $0.13 earnings per share. Excluding certain long-term retention plan costs, earnings per share, both basic and diluted would have been $0.14 per share.
As an aside another stock forming a heck of a double bottom ($10s)- I see a lot of charts like this which means a lot of stocks are about to bounce hard or we're about to fall through the floor on multiple charts.

[Jul 19: Mercadolibre Up 15% on Termination of CEO Stock Sale]
[May 14: Mercadolibre Reports]
[Mar 6: Cutting Mercadolibre in Half on Nice Earnings]

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