Taking everything into account, MELI scores 7 out of 10 in our fundamental rating. MELI was compared to 30 industry peers in the Broadline Retail industry. Both the health and profitability get an excellent rating, making MELI a very profitable company, without any liquidiy or solvency issues. MELI shows excellent growth, but is valued quite expensive already. These ratings would make MELI suitable 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.
In the past 5 years MELI always reported a positive cash flow from operatings.

1.2 Ratios

MELI has a Return On Assets of 5.66%. This is in the better half of the industry: MELI outperforms 70.00% of its industry peers.
Looking at the Return On Equity, with a value of 33.40%, MELI belongs to the top of the industry, outperforming 96.67% of the companies in the same industry.
With an excellent Return On Invested Capital value of 18.27%, MELI belongs to the best of the industry, outperforming 93.33% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for MELI is significantly above the industry average of 9.29%.

		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

Looking at the Profit Margin, with a value of 7.93%, MELI is in the better half of the industry, outperforming 76.67% of the companies in the same industry.
In the last couple of years the Profit Margin of MELI has grown nicely.
MELI's Operating Margin of 11.96% is amongst the best of the industry. MELI outperforms 86.67% of its industry peers.
MELI's Operating Margin has improved in the last couple of years.
The Gross Margin of MELI (45.14%) is better 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.
Compared to 1 year ago, MELI has about the same amount of shares outstanding.
The number of shares outstanding for MELI has been increased compared to 5 years ago.
MELI has a better debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 3.47 indicates that MELI is not in any danger for bankruptcy at the moment.
The Altman-Z score of MELI (3.47) is better than 73.33% of its industry peers.
MELI has a debt to FCF ratio of 0.91. This is a very positive value and a sign of high solvency as it would only need 0.91 years to pay back of all of its debts.
The Debt to FCF ratio of MELI (0.91) is better than 83.33% of its industry peers.
A Debt/Equity ratio of 0.55 indicates that MELI is somewhat dependend on debt financing.
MELI has a Debt to Equity ratio of 0.55. This is comparable to the rest of the industry: MELI outperforms 43.33% of its industry peers.
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	3.47

ROIC/WACC2.05

WACC8.91%

2.3 Liquidity

A Current Ratio of 1.17 indicates that MELI should not have too much problems paying its short term obligations.
The Current ratio of MELI (1.17) is worse than 76.67% of its industry peers.
A Quick Ratio of 1.15 indicates that MELI should not have too much problems paying 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

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Altman-Z score

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3. Growth

3.1 Past

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

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

MELI is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 31.97% yearly.
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

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in 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

Based on the Price/Earnings ratio of 52.15, the valuation of MELI can be described as expensive.
Compared to the rest of the industry, the Price/Earnings ratio of MELI is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 27.21, MELI is valued quite expensively.
MELI is valuated quite expensively with a Price/Forward Earnings ratio of 34.64.
MELI's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. MELI is more expensive than 63.33% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of MELI to the average of the S&P500 Index (24.26), we can say MELI is valued slightly more expensively.

		Industry Rank	Sector Rank
PE	52.15
Fwd PE	34.64

4.2 Price Multiples

MELI's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. MELI is more expensive than 70.00% of the companies in the same industry.
MELI's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. MELI is cheaper than 70.00% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	12.59
EV/EBITDA	27.48

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MELI does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of MELI 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.