Tech Spending Sets Up a Power Struggle in the C-Suite
CFOs and CIOs battle it out over budgets. Plus, Mercado Libre's Martin de los Santos talks e-commerce in Latin America.
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Welcome to CFO Briefing, a newsletter devoted to corporate finance and what leaders need to know. This week, I take a closer look at the sometimes tricky relationship between finance and IT and talk to the CFO of Latin America's Mercado Libre.
But first, here's some other news that caught my eye:
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5 hours ago
- Yahoo
Why MercadoLibre (MELI) Stock Is Down Today
Shares of latin American e-commerce and fintech company MercadoLibre (NASDAQ:MELI) fell 5.3% in the morning session after Jefferies analysts downgraded the stock from a Buy to a Hold rating. The analysts noted that "with the shares up over 50% year-to-date and following a strong relative performance in 2023, it downgrades the shares on valuation." Importantly, the downgrade does not indicate a negative shift in the company's fundamentals. Rather, the analysts viewed the recent run-up in MELI's stock price as an opportunity for investors to lock in some profits. The shares closed the day at $2,478, down 3.8% from previous close. The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy MercadoLibre? Access our full analysis report here, it's free. MercadoLibre's shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move we wrote about was 29 days ago when the stock gained 7.3% on the news that the company reported impressive first-quarter 2025 results, which significantly blew past analysts' revenue, EPS, and EBITDA expectations. The key highlight for the quarter was Argentina's staggering revenue growth of 184%, powered by triple-digit expansion in gross merchandise volume and a sharp rebound in consumer demand. As a result, sales climbed 37% from the previous year. Profits also improved meaningfully, aided by scale efficiencies and lower fulfillment costs per order in major markets like Brazil and Mexico. The EPS beat was a direct result of these gains, reflecting improved execution despite currency headwinds in Brazil and investment drag in Mexico. Overall, it was a strong quarter for MercadoLibre, driven by outsized growth in Argentina, resilient consumer demand, and encouraging momentum in fintech and advertising, despite mixed buyer metrics. MercadoLibre is up 40.6% since the beginning of the year, and at $2,482 per share, it is trading close to its 52-week high of $2,606 from May 2025. Investors who bought $1,000 worth of MercadoLibre's shares 5 years ago would now be looking at an investment worth $2,890. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 hours ago
- Yahoo
Is MercadoLibre (MELI) a Solid Growth Stock? 3 Reasons to Think "Yes"
Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all. In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end. However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks. MercadoLibre (MELI) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank. Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). Here are three of the most important factors that make the stock of this operator of an online marketplace and payments system in Latin America a great growth pick right now. Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration. While the historical EPS growth rate for MercadoLibre is 164.3%, investors should actually focus on the projected growth. The company's EPS is expected to grow 29.5% this year, crushing the industry average, which calls for EPS growth of 16.1%. While cash is the lifeblood of any business, higher-than-average cash flow growth is more important and beneficial for growth-oriented companies than for mature companies. That's because, growth in cash flow enables these companies to expand their businesses without depending on expensive outside funds. Right now, year-over-year cash flow growth for MercadoLibre is 67.3%, which is higher than many of its peers. In fact, the rate compares to the industry average of -6.1%. While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 937.8% over the past 3-5 years versus the industry average of 12.2%. Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements. The current-year earnings estimates for MercadoLibre have been revising upward. The Zacks Consensus Estimate for the current year has surged 5.8% over the past month. While the overall earnings estimate revisions have made MercadoLibre a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. This combination positions MercadoLibre well for outperformance, so growth investors may want to bet on it. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MercadoLibre, Inc. (MELI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
11 hours ago
- Yahoo
Wall Street Analysts Think MercadoLibre (MELI) Is a Good Investment: Is It?
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter? Let's take a look at what these Wall Street heavyweights have to say about MercadoLibre (MELI) before we discuss the reliability of brokerage recommendations and how to use them to your advantage. MercadoLibre currently has an average brokerage recommendation (ABR) of 1.32, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 17 brokerage firms. An ABR of 1.32 approximates between Strong Buy and Buy. Of the 17 recommendations that derive the current ABR, 14 are Strong Buy, representing 82.4% of all recommendations. Check price target & stock forecast for MercadoLibre here>>>The ABR suggests buying MercadoLibre, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation. Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation. In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement. Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision. Although both Zacks Rank and ABR are displayed in a range of 1-5, they are different measures altogether. Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5. Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide. In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research. In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks. There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices. Looking at the earnings estimate revisions for MercadoLibre, the Zacks Consensus Estimate for the current year has increased 5.8% over the past month to $48.80. Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for MercadoLibre. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> Therefore, the Buy-equivalent ABR for MercadoLibre may serve as a useful guide for investors. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MercadoLibre, Inc. (MELI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
