We assign a fundamental rating of 7 out of 10 to MELI. MELI was compared to 30 industry peers in the Broadline Retail industry. MELI gets an excellent profitability rating and is at the same time showing great financial health properties. MELI is valued quite expensively, but it does show have an excellent growth rating. With these ratings, MELI could be worth investigating further for growth and quality investing!.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

MELI had positive earnings in the past year.
In the past year MELI had a positive cash flow from operations.
MELI had positive earnings in 4 of the past 5 years.
Each year in the past 5 years MELI had a positive operating cash flow.

1.2 Ratios

The Return On Assets of MELI (5.66%) is better than 70.00% of its industry peers.
The Return On Equity of MELI (33.40%) is better than 96.67% of its industry peers.
MELI's Return On Invested Capital of 18.27% is amongst the best of the industry. MELI outperforms 93.33% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MELI is significantly above the industry average of 9.28%.

		Industry Rank	Sector Rank
ROA	5.66%
ROE	33.4%
ROIC	18.27%

ROA(3y)5.57%

ROA(5y)3.5%

ROE(3y)34.15%

ROE(5y)21.57%

ROIC(3y)20.35%

ROIC(5y)14.34%

1.3 Margins

MELI has a Profit Margin of 7.93%. This is in the better half of the industry: MELI outperforms 76.67% of its industry peers.
In the last couple of years the Profit Margin of MELI has grown nicely.
MELI has a Operating Margin of 11.96%. This is amongst the best in the industry. MELI outperforms 86.67% of its industry peers.
In the last couple of years the Operating Margin of MELI has grown nicely.
MELI has a better Gross Margin (45.14%) than 66.67% of its industry peers.
MELI's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	11.96%
PM (TTM)	7.93%
GM	45.14%

OM growth 3Y25.83%

OM growth 5YN/A

PM growth 3Y98.37%

PM growth 5YN/A

GM growth 3Y2.74%

GM growth 5Y-0.81%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MELI is creating value.
The number of shares outstanding for MELI remains at a similar level compared to 1 year ago.
Compared to 5 years ago, MELI has more shares outstanding
The debt/assets ratio for MELI has been reduced compared to a year ago.

2.2 Solvency

MELI has an Altman-Z score of 3.63. This indicates that MELI is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of MELI (3.63) is better than 76.67% of its industry peers.
The Debt to FCF ratio of MELI is 0.91, which is an excellent value as it means it would take MELI, only 0.91 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of MELI (0.91) is better than 83.33% of its industry peers.
MELI has a Debt/Equity ratio of 0.55. This is a neutral value indicating MELI is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.55, MELI is in line with its industry, outperforming 43.33% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for MELI, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.55
Debt/FCF	0.91
Altman-Z	3.63

ROIC/WACC2.05

WACC8.91%

2.3 Liquidity

MELI has a Current Ratio of 1.17. This is a normal value and indicates that MELI is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.17, MELI is doing worse than 76.67% of the companies in the same industry.
MELI has a Quick Ratio of 1.15. This is a normal value and indicates that MELI is financially healthy and should not expect problems in meeting its short term obligations.
MELI has a Quick ratio (1.15) which is in line with its industry peers.
MELI does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	1.17
Quick Ratio	1.15

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

MELI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 44.60%, which is quite impressive.
Measured over the past years, MELI shows a very strong growth in Earnings Per Share. The EPS has been growing by 172.65% on average per year.
MELI shows a strong growth in Revenue. In the last year, the Revenue has grown by 36.94%.
Measured over the past years, MELI shows a very strong growth in Revenue. The Revenue has been growing by 55.35% on average per year.

EPS 1Y (TTM)44.6%

EPS 3Y172.65%

EPS 5YN/A

EPS Q2Q%6.26%

Revenue 1Y (TTM)36.94%

Revenue growth 3Y43.24%

Revenue growth 5Y55.35%

Sales Q2Q%39.48%

3.2 Future

The Earnings Per Share is expected to grow by 31.97% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 24.56% on average over the next years. This is a very strong growth

EPS Next Y11.47%

EPS Next 2Y27.93%

EPS Next 3Y31.86%

EPS Next 5Y31.97%

Revenue Next Year38.59%

Revenue Next 2Y33.64%

Revenue Next 3Y29.53%

Revenue Next 5Y24.56%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 55.36, MELI can be considered very expensive at the moment.
MELI's Price/Earnings is on the same level as the industry average.
MELI's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 28.82.
Based on the Price/Forward Earnings ratio of 36.77, the valuation of MELI can be described as expensive.
Based on the Price/Forward Earnings ratio, MELI is valued a bit more expensive than 63.33% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.95. MELI is valued slightly more expensive when compared to this.

		Industry Rank	Sector Rank
PE	55.36
Fwd PE	36.77

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, MELI is valued a bit more expensive than the industry average as 70.00% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, MELI is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	13.36
EV/EBITDA	29.55

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
MELI has an outstanding profitability rating, which may justify a higher PE ratio.
MELI's earnings are expected to grow with 31.86% in the coming years. This may justify a more expensive valuation.