Is MERCADOLIBRE INC (NASDAQ:MELI) a Minervini-style stock?

In this article we will dive into MERCADOLIBRE INC (NASDAQ:MELI) as a possible candidate for growth investing. Investors should always do their own research, but we noticed MERCADOLIBRE INC showing up in our Minervini growth screen, which makes it worth to investigate a bit more.

Minervini Trend Template Analysis.

The Minervini Trend Template is a set of technical criteria designed to identify stocks in strong uptrends. We can check all the boxes for MELI:

• ✔ Relative Strength is above 70.
• ✔ Current price is within 25% of it's 52-week high.
• ✔ Current price is at least 30% above it's 52-week low.
• ✔ The current price is above the 50-, 150- and 200-day SMA price line.
• ✔ The SMA(200) is trending upwards.
• ✔ The SMA(150) is above the SMA(200)
• ✔ The SMA(50) is above the SMA(150) and the SMA(200)

What matters for high growth investors.

ChartMill assigns a High Growth Momentum Rating (HGM) to every stock. This score ranges from 0 to 10 and evaluates the different growth and profitability aspects, including accelleration, surprises and revisions. MELI scores a 6 out of 10:

Earnings Momentum

• MELI has demonstrated consistent growth in its earnings per share (EPS) from one quarter to another (Q2Q), with a 288.0% increase. This indicates improving financial performance and the company's effective management of its operations.
• MELI shows accelerating EPS growth: when comparing the current Q2Q growth of 288.0% to the previous quarter Q2Q growth of 9.36%, we see the growth rate improving.
• MELI has achieved 92.94% growth in EPS over the past 12 months, reflecting a sustained improvement in earnings performance.
• MELI has achieved 173.0% growth in EPS over the past 3 years, reflecting a sustained improvement in earnings performance.
• The q2q revenue growth of 42.2% of MELI highlights the company's ability to generate incremental revenue and suggests positive market demand for its products or services.
• Accelerating Sales growth for MELI: the current Q2Q growth of 42.2% exceeds the previous quarter Q2Q growth of 35.27%.
• With notable 1-year revenue growth of 38.89%, MELI exemplifies its ability to generate increased sales and revenue streams. This growth signifies the company's strong business performance and its potential for future growth.
• MELI has seen a 7.68% change in the average next Quarter EPS Estimate by analysts over the last 3 months, signaling the shifting perception of the company's EPS outlook.
• MELI has exceeded EPS estimates 3 times in the last 4 quarters, demonstrating its ability to outperform market expectations. This trend highlights the company's strong financial performance and its potential for future growth.

Financial Strength & Profitability

• The profit margin of MELI has seen steady growth over the past year, signaling improved profitability.
• MELI has experienced notable growth in its free cash flow (FCF) over the past year, signaling improved cash generation and strong financial performance. This growth suggests the company's ability to generate excess cash for reinvestment or shareholder returns.
• The Return on Equity(ROE) of MELI is 43.92%, which is a strong number. This indicates the company's ability to generate favorable returns for shareholders and reflects its effective management of resources.
• With a Debt/Equity ratio of 0.66, MELI demonstrates prudent financial management.

Market Strength & Institutional Confidence

• With 83.73% of the total shares held by institutional investors, MELI showcases a healthy distribution of ownership. This suggests a mix of institutional and retail investors, fostering a dynamic market for the stock.
• MELI has achieved an impressive Relative Strength (RS) rating of 95.16, showcasing its ability to outperform the broader market.

How does the Setup look for MELI

The Setup Rating of a stock determines to which extend the stock is consolidating. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. For MELI this score is currently 4:

MELI has an excellent technical rating, but the quality of the setup is only medium at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first.

Our latest full technical report of MELI contains the most current technical analsysis.

Concluding

It looks like MERCADOLIBRE INC meets the Minervini criteria. More high growth momentum breakout stocks can be found in our High Growth Momentum + Trend Template screen.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.