Mercadolibre hosts online commerce platforms in Latin America. It offers MercadoLibre Marketplace, an automated online e-commerce service for businesses and individuals to list items and conduct their sales and purchases online in a fixed-price or auction-based format. The company was founded in 1999 and is based in Vicente Lopez, Argentina.
MELI Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Mercadolibre Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Mercadolibre Inc ranked in the 22th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. In terms of the factors that were most noteworthy in this DCF analysis for MELI, they are:
98% of the company's capital comes from equity, which is greater than 91.37% of stocks in our cash flow based forecasting set.
The business' balance sheet reveals debt to be 2% of the company's capital (with equity being the remaining amount). Approximately only 8.59% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
As a business, Mercadolibre Inc experienced a tax rate of about 30% over the past twelve months; relative to its sector (Technology), this tax rate is higher than 91.35% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
DOX, IEHC, ITRI, KOSS, and LSCC can be thought of as valuation peers to MELI, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
On this episode of Fool Live that aired on Nov. 30, 2020, Fool.com contributors Danny Vena and Brian Withers discuss how "adding to your winners" can make investors far more money than "buying the dip." It has essentially tripled since then.
This played to the sweet spots of two e-commerce leaders: retail giant Amazon (NASDAQ: AMZN) and Latin America's largest online retailer, MercadoLibre (NASDAQ: MELI). Amazon's five-year head start on MercadoLibre and its faster growth has put the e-commerce juggernaut into the select $1 trillion-plus market capitalization club.
On this episode of Fool Live that aired on Nov. 24, 2020, "The Wrap" host Jason Hall and Fool.com contributor Danny Vena discuss disruptive upstart Sea Limited (NYSE: SE), what the company has to offer, and why it's just getting started. Jason Hall: I know we teased a lot of folks who are very interested in Always Learning Fool's question about Danny Vena's thoughts on Sea Limited, ticker, SE, and whether or not Danny thinks that can be another Mercadolibre.