Intrinsic value of MercadoLibre - MELI

Previous Close

$358.86

  Intrinsic Value

$3,673

stock screener

  Rating & Target

str. buy

+923%

Previous close

$358.86

 
Intrinsic value

$3,673

 
Up/down potential

+923%

 
Rating

str. buy

We calculate the intrinsic value of MELI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 15.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2,237
  3,456
  5,168
  7,499
  10,580
  14,545
  19,523
  25,635
  32,986
  41,665
  51,738
  63,255
  76,243
  90,714
  106,664
  124,076
  142,925
  163,181
  184,811
  207,782
  232,065
  257,634
  284,470
  312,560
  341,901
  372,495
  404,357
  437,507
  471,976
  507,802
Variable operating expenses, $m
  1,749
  2,696
  4,026
  5,836
  8,230
  11,309
  15,177
  19,924
  25,635
  32,375
  40,189
  49,135
  59,224
  70,465
  82,854
  96,379
  111,020
  126,755
  143,556
  161,400
  180,262
  200,123
  220,969
  242,789
  265,580
  289,345
  314,094
  339,844
  366,619
  394,447
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,749
  2,696
  4,026
  5,836
  8,230
  11,309
  15,177
  19,924
  25,635
  32,375
  40,189
  49,135
  59,224
  70,465
  82,854
  96,379
  111,020
  126,755
  143,556
  161,400
  180,262
  200,123
  220,969
  242,789
  265,580
  289,345
  314,094
  339,844
  366,619
  394,447
Operating income, $m
  488
  760
  1,142
  1,662
  2,350
  3,235
  4,347
  5,711
  7,352
  9,289
  11,549
  14,120
  17,019
  20,250
  23,810
  27,697
  31,905
  36,426
  41,255
  46,382
  51,803
  57,511
  63,501
  69,772
  76,321
  83,151
  90,263
  97,663
  105,357
  113,355
EBITDA, $m
  537
  830
  1,241
  1,801
  2,540
  3,493
  4,688
  6,156
  7,921
  10,005
  12,424
  15,189
  18,308
  21,783
  25,613
  29,794
  34,320
  39,184
  44,378
  49,894
  55,725
  61,865
  68,309
  75,054
  82,099
  89,446
  97,097
  105,057
  113,334
  121,936
Interest expense (income), $m
  8
  29
  92
  183
  312
  487
  718
  1,016
  1,390
  1,849
  2,401
  3,053
  3,810
  4,675
  5,650
  6,737
  7,935
  9,243
  10,658
  12,180
  13,804
  15,530
  17,354
  19,274
  21,290
  23,399
  25,603
  27,901
  30,294
  32,784
  35,373
Earnings before tax, $m
  459
  668
  959
  1,351
  1,863
  2,517
  3,331
  4,321
  5,503
  6,888
  8,496
  10,311
  12,345
  14,600
  17,073
  19,762
  22,662
  25,768
  29,075
  32,578
  36,273
  40,157
  44,227
  48,482
  52,922
  57,548
  62,362
  67,369
  72,574
  77,982
Tax expense, $m
  124
  180
  259
  365
  503
  680
  899
  1,167
  1,486
  1,860
  2,294
  2,784
  3,333
  3,942
  4,610
  5,336
  6,119
  6,957
  7,850
  8,796
  9,794
  10,842
  11,941
  13,090
  14,289
  15,538
  16,838
  18,190
  19,595
  21,055
Net income, $m
  335
  488
  700
  986
  1,360
  1,837
  2,431
  3,154
  4,017
  5,028
  6,202
  7,527
  9,012
  10,658
  12,463
  14,426
  16,543
  18,810
  21,225
  23,782
  26,479
  29,315
  32,286
  35,392
  38,633
  42,010
  45,524
  49,179
  52,979
  56,927

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,676
  4,134
  6,182
  8,970
  12,655
  17,398
  23,353
  30,664
  39,458
  49,838
  61,888
  75,663
  91,200
  108,510
  127,588
  148,416
  170,963
  195,192
  221,065
  248,543
  277,590
  308,175
  340,275
  373,876
  408,972
  445,569
  483,681
  523,334
  564,565
  607,418
Adjusted assets (=assets-cash), $m
  2,676
  4,134
  6,182
  8,970
  12,655
  17,398
  23,353
  30,664
  39,458
  49,838
  61,888
  75,663
  91,200
  108,510
  127,588
  148,416
  170,963
  195,192
  221,065
  248,543
  277,590
  308,175
  340,275
  373,876
  408,972
  445,569
  483,681
  523,334
  564,565
  607,418
Revenue / Adjusted assets
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
Average production assets, $m
  378
  584
  873
  1,267
  1,788
  2,458
  3,299
  4,332
  5,575
  7,041
  8,744
  10,690
  12,885
  15,331
  18,026
  20,969
  24,154
  27,578
  31,233
  35,115
  39,219
  43,540
  48,075
  52,823
  57,781
  62,952
  68,336
  73,939
  79,764
  85,818
Working capital, $m
  -1,427
  -2,205
  -3,297
  -4,784
  -6,750
  -9,280
  -12,456
  -16,355
  -21,045
  -26,582
  -33,009
  -40,356
  -48,643
  -57,876
  -68,052
  -79,160
  -91,186
  -104,109
  -117,909
  -132,565
  -148,057
  -164,371
  -181,492
  -199,413
  -218,133
  -237,652
  -257,980
  -279,130
  -301,121
  -323,977
Total debt, $m
  1,175
  2,349
  3,998
  6,242
  9,209
  13,027
  17,821
  23,706
  30,785
  39,141
  48,841
  59,930
  72,437
  86,372
  101,730
  118,496
  136,646
  156,151
  176,979
  199,099
  222,481
  247,102
  272,943
  299,991
  328,244
  357,704
  388,384
  420,305
  453,496
  487,993
Total liabilities, $m
  2,154
  3,328
  4,977
  7,221
  10,187
  14,005
  18,799
  24,685
  31,763
  40,120
  49,819
  60,909
  73,416
  87,350
  102,709
  119,475
  137,625
  157,130
  177,958
  200,077
  223,460
  248,081
  273,921
  300,970
  329,223
  358,683
  389,363
  421,284
  454,474
  488,972
Total equity, $m
  522
  806
  1,206
  1,749
  2,468
  3,393
  4,554
  5,980
  7,694
  9,718
  12,068
  14,754
  17,784
  21,159
  24,880
  28,941
  33,338
  38,063
  43,108
  48,466
  54,130
  60,094
  66,354
  72,906
  79,750
  86,886
  94,318
  102,050
  110,090
  118,447
Total liabilities and equity, $m
  2,676
  4,134
  6,183
  8,970
  12,655
  17,398
  23,353
  30,665
  39,457
  49,838
  61,887
  75,663
  91,200
  108,509
  127,589
  148,416
  170,963
  195,193
  221,066
  248,543
  277,590
  308,175
  340,275
  373,876
  408,973
  445,569
  483,681
  523,334
  564,564
  607,419
Debt-to-equity ratio
  2.250
  2.910
  3.320
  3.570
  3.730
  3.840
  3.910
  3.960
  4.000
  4.030
  4.050
  4.060
  4.070
  4.080
  4.090
  4.090
  4.100
  4.100
  4.110
  4.110
  4.110
  4.110
  4.110
  4.110
  4.120
  4.120
  4.120
  4.120
  4.120
  4.120
Adjusted equity ratio
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  335
  488
  700
  986
  1,360
  1,837
  2,431
  3,154
  4,017
  5,028
  6,202
  7,527
  9,012
  10,658
  12,463
  14,426
  16,543
  18,810
  21,225
  23,782
  26,479
  29,315
  32,286
  35,392
  38,633
  42,010
  45,524
  49,179
  52,979
  56,927
Depreciation, amort., depletion, $m
  49
  70
  99
  138
  190
  257
  341
  445
  569
  716
  874
  1,069
  1,289
  1,533
  1,803
  2,097
  2,415
  2,758
  3,123
  3,512
  3,922
  4,354
  4,808
  5,282
  5,778
  6,295
  6,834
  7,394
  7,976
  8,582
Funds from operations, $m
  384
  558
  799
  1,124
  1,551
  2,095
  2,773
  3,599
  4,586
  5,744
  7,077
  8,596
  10,300
  12,191
  14,266
  16,523
  18,959
  21,568
  24,348
  27,293
  30,401
  33,669
  37,093
  40,674
  44,411
  48,305
  52,358
  56,573
  60,955
  65,509
Change in working capital, $m
  -535
  -778
  -1,092
  -1,487
  -1,966
  -2,530
  -3,176
  -3,899
  -4,690
  -5,537
  -6,427
  -7,348
  -8,287
  -9,233
  -10,176
  -11,109
  -12,026
  -12,923
  -13,800
  -14,656
  -15,492
  -16,313
  -17,121
  -17,922
  -18,719
  -19,519
  -20,328
  -21,150
  -21,991
  -22,857
Cash from operations, $m
  920
  1,336
  1,891
  2,611
  3,516
  4,624
  5,949
  7,499
  9,276
  11,280
  13,503
  15,943
  18,587
  21,423
  24,442
  27,632
  30,984
  34,492
  38,148
  41,949
  45,894
  49,982
  54,215
  58,596
  63,130
  67,824
  72,686
  77,723
  82,946
  88,365
Maintenance CAPEX, $m
  -24
  -38
  -58
  -87
  -127
  -179
  -246
  -330
  -433
  -557
  -704
  -874
  -1,069
  -1,289
  -1,533
  -1,803
  -2,097
  -2,415
  -2,758
  -3,123
  -3,512
  -3,922
  -4,354
  -4,808
  -5,282
  -5,778
  -6,295
  -6,834
  -7,394
  -7,976
New CAPEX, $m
  -142
  -206
  -289
  -394
  -521
  -670
  -841
  -1,033
  -1,242
  -1,467
  -1,702
  -1,946
  -2,195
  -2,446
  -2,695
  -2,943
  -3,185
  -3,423
  -3,655
  -3,882
  -4,104
  -4,321
  -4,535
  -4,747
  -4,959
  -5,171
  -5,385
  -5,602
  -5,825
  -6,055
Cash from investing activities, $m
  -166
  -244
  -347
  -481
  -648
  -849
  -1,087
  -1,363
  -1,675
  -2,024
  -2,406
  -2,820
  -3,264
  -3,735
  -4,228
  -4,746
  -5,282
  -5,838
  -6,413
  -7,005
  -7,616
  -8,243
  -8,889
  -9,555
  -10,241
  -10,949
  -11,680
  -12,436
  -13,219
  -14,031
Free cash flow, $m
  754
  1,092
  1,544
  2,130
  2,869
  3,775
  4,862
  6,136
  7,601
  9,256
  11,097
  13,123
  15,323
  17,689
  20,213
  22,887
  25,702
  28,653
  31,735
  34,944
  38,279
  41,739
  45,325
  49,041
  52,889
  56,876
  61,006
  65,287
  69,727
  74,334
Issuance/(repayment) of debt, $m
  807
  1,174
  1,649
  2,244
  2,967
  3,818
  4,794
  5,885
  7,079
  8,356
  9,700
  11,090
  12,507
  13,935
  15,358
  16,766
  18,150
  19,505
  20,828
  22,120
  23,382
  24,621
  25,841
  27,049
  28,253
  29,460
  30,680
  31,921
  33,190
  34,497
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  807
  1,174
  1,649
  2,244
  2,967
  3,818
  4,794
  5,885
  7,079
  8,356
  9,700
  11,090
  12,507
  13,935
  15,358
  16,766
  18,150
  19,505
  20,828
  22,120
  23,382
  24,621
  25,841
  27,049
  28,253
  29,460
  30,680
  31,921
  33,190
  34,497
Total cash flow (excl. dividends), $m
  1,561
  2,266
  3,192
  4,374
  5,835
  7,593
  9,656
  12,021
  14,679
  17,613
  20,797
  24,212
  27,830
  31,624
  35,571
  39,653
  43,852
  48,158
  52,562
  57,063
  61,661
  66,360
  71,166
  76,090
  81,142
  86,336
  91,686
  97,208
  102,917
  108,832
Retained Cash Flow (-), $m
  -196
  -284
  -399
  -544
  -719
  -925
  -1,161
  -1,426
  -1,715
  -2,024
  -2,350
  -2,686
  -3,030
  -3,375
  -3,720
  -4,061
  -4,397
  -4,725
  -5,045
  -5,358
  -5,664
  -5,964
  -6,260
  -6,552
  -6,844
  -7,136
  -7,432
  -7,732
  -8,040
  -8,356
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,365
  1,981
  2,793
  3,830
  5,117
  6,669
  8,495
  10,595
  12,964
  15,589
  18,447
  21,526
  24,800
  28,248
  31,851
  35,591
  39,455
  43,433
  47,517
  51,705
  55,997
  60,396
  64,906
  69,537
  74,298
  79,200
  84,254
  89,476
  94,878
  100,475
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  1,309
  1,814
  2,431
  3,154
  3,966
  4,840
  5,739
  6,622
  7,447
  8,172
  8,760
  9,186
  9,429
  9,483
  9,351
  9,045
  8,585
  7,999
  7,316
  6,570
  5,792
  5,011
  4,254
  3,542
  2,890
  2,311
  1,808
  1,384
  1,036
  757
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

MercadoLibre, Inc. is an e-commerce company. The Company enables commerce through its marketplace platform in Latin America, which is designed to provide users with a portfolio of services to facilitate commercial transactions. Its geographic segments are Brazil, Argentina, Mexico Venezuela and Other Countries (which includes Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal, Guatemala, Bolivia, Paraguay, Uruguay and the United States of America). It also operates online commerce platforms in the Dominican Republic, Honduras, Nicaragua, Salvador, Panama, Bolivia, Guatemala, Paraguay and Portugal. It offers an ecosystem of six integrated e-commerce services: the MercadoLibre Marketplace, the MercadoLibre Classifieds Service, the MercadoPago payments solution, the MercadoLibre advertising program, the MercadoShops online Webstores solution and the MercadoEnvios shipping service.

FINANCIAL RATIOS  of  MercadoLibre (MELI)

Valuation Ratios
P/E Ratio 116.5
Price to Sales 18.8
Price to Book 36.9
Price to Tangible Book
Price to Cash Flow 83.4
Price to Free Cash Flow 140.2
Growth Rates
Sales Growth Rate 29.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20.3%
Cap. Spend. - 3 Yr. Gr. Rate -7.5%
Financial Strength
Quick Ratio 41
Current Ratio 0
LT Debt to Equity 70.4%
Total Debt to Equity 73.2%
Interest Coverage 24
Management Effectiveness
Return On Assets 12%
Ret/ On Assets - 3 Yr. Avg. 11%
Return On Total Capital 19.7%
Ret/ On T. Cap. - 3 Yr. Avg. 17%
Return On Equity 35.4%
Return On Equity - 3 Yr. Avg. 28.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 63.6%
Gross Margin - 3 Yr. Avg. 67.4%
EBITDA Margin 26.3%
EBITDA Margin - 3 Yr. Avg. 26.6%
Operating Margin 21.4%
Oper. Margin - 3 Yr. Avg. 21.5%
Pre-Tax Margin 21.9%
Pre-Tax Margin - 3 Yr. Avg. 22.3%
Net Profit Margin 16.1%
Net Profit Margin - 3 Yr. Avg. 15.2%
Effective Tax Rate 26.5%
Eff/ Tax Rate - 3 Yr. Avg. 32%
Payout Ratio 17.6%

MELI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MELI stock intrinsic value calculation we used $1398 million for the last fiscal year's total revenue generated by MercadoLibre. The default revenue input number comes from 2017 income statement of MercadoLibre. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MELI stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for MELI is calculated based on our internal credit rating of MercadoLibre, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of MercadoLibre.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MELI stock the variable cost ratio is equal to 78.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MELI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 7.8% for MercadoLibre.

Corporate tax rate of 27% is the nominal tax rate for MercadoLibre. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MELI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MELI are equal to 16.9%.

Life of production assets of 10 years is the average useful life of capital assets used in MercadoLibre operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MELI is equal to -63.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $326 million for MercadoLibre - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 44 million for MercadoLibre is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of MercadoLibre at the current share price and the inputted number of shares is $15.8 billion.

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COMPANY NEWS

▶ MercadoLibre Faces Growing Pains   [Aug-12-18 01:30PM  Motley Fool]
▶ Choppy Waters Ahead for Alibaba Stock   [Aug-10-18 11:56PM  InvestorPlace]
▶ 3 ETFs to Gain Frontier Markets Exposure   [11:33AM  Investopedia]
▶ Why MercadoLibre Inc Shares Popped Today   [03:36PM  Motley Fool]
▶ Small Caps, Nasdaq Lead Stock Market; MercadoLibre Leaps   [11:57AM  Investor's Business Daily]
▶ Here's What's Held Back MercadoLibre Lately   [Aug-08-18 07:42PM  Motley Fool]
▶ MercadoLibre: 2Q Earnings Snapshot   [04:07PM  Associated Press]
▶ 5 Earnings Charts to Watch This Week   [Aug-07-18 04:54PM  Zacks]
▶ Weighing MercadoLibre's Vast Payments Opportunity   [Jul-17-18 04:57PM  Motley Fool]
▶ 5 Stocks to Hold Until the Next World Cup   [03:26PM  Motley Fool]
▶ 3 ETFs to Benefit From China's Tariff Retaliations   [Jun-21-18 11:29AM  Investopedia]
▶ Time to Get Greedy With MercadoLibre, Inc. Stock   [Jun-14-18 08:34PM  Motley Fool]
▶ 3 Stocks That Turned $8,000 into $64,000   [09:00AM  Motley Fool]
▶ Stock Market Up Modestly, But Tesla And MercadoLibre Jump   [Jun-11-18 01:15PM  Investor's Business Daily]
▶ Is Latin America the Next E-Commerce Battleground?   [May-22-18 01:21PM  Motley Fool]
▶ The "Amazon" of Latin America   [12:39PM  Motley Fool]
▶ 1 Explanation for MercadoLibre's First-Quarter Miss   [May-17-18 06:19PM  Motley Fool]
▶ The 3 Stocks on the MFM Team's Radar   [06:12PM  Motley Fool]
▶ Walmart Incs Flipkart Deal Should Be a Home Run   [May-15-18 03:34PM  InvestorPlace]
▶ MercadoLibre: 1Q Earnings Snapshot   [04:36PM  Associated Press]
▶ 4 Reasons to Buy MercadoLibre and Hold for the Long Term   [Apr-24-18 08:11AM  Motley Fool]
▶ The Top 5 Growth Stocks to Buy Today   [Apr-20-18 06:34PM  Motley Fool]
▶ MercadoLibre Is Still Beating Amazon in Latin America   [Apr-15-18 03:02PM  Motley Fool]
▶ Five eCommerce Stocks to Buy Now   [Apr-12-18 07:40PM  Insider Monkey]
▶ The Best CEO You Maybe Have Never Heard Of   [Apr-10-18 01:59PM  Motley Fool]
▶ These 3 Stocks Doubled in 2017 -- Are They Still Buys?   [Apr-02-18 11:31AM  Motley Fool]
▶ Could MercadoLibre, Inc. Be a Millionaire-Maker Stock?   [Mar-28-18 02:48PM  Motley Fool]
▶ Amazon's Focus on Customer Loyalty Is Paying Off   [Mar-21-18 05:45PM  Motley Fool]
▶ Is Amazon Gunning for MercadoLibre?   [Mar-13-18 08:45AM  Motley Fool]
▶ Could MercadoLibre Stock Gain 29%? 1 Analyst Thinks So   [Mar-01-18 12:19PM  Motley Fool]
▶ Is MercadoLibre, Inc. a Buy?   [11:15AM  Motley Fool]
▶ 3 Things MercadoLibre's Management Wants You to Know   [Feb-26-18 11:32AM  Motley Fool]
▶ Dow, S&P 500 Set To Retest Resistance; Wingstop Takes A Hit   [Feb-23-18 09:41AM  Investor's Business Daily]
▶ MercadoLibre reports 4Q loss   [Feb-22-18 06:29PM  Associated Press]
▶ Mercadolibre Q4 Earnings Preview   [11:14AM  Benzinga]
▶ Why MercadoLibre, Inc. Stock Popped 23% in January   [Feb-12-18 06:02PM  Motley Fool]
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