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MercadoLibre Keeps On Keepin' On

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Latin American e-commerce king MercadoLibre (Nasdaq: MELI  ) sure is riding that region's growth, and the company's most recent round of fourth-quarter and full-year results show it.

Fourth-quarter net revenues climbed 38.8% to $86.5 million, while that figure gets ratcheted up to 46.5% when measured in local currencies. Net income during the period rose 35.6% to $21.6 million, similarly higher in local currencies at 42% growth. That came out to earnings per share of $0.47, which was short of the $0.51 profit the Street was looking for.

Gross merchandise volume jumped 46.7% to $1.45 billion, and total payment volume soared by 70.4% to $402.3 million. Total payment transactions processed through MercadoPago almost doubled, rising by 95%. MercadoLibre sure has learned a thing or two from domestic counterpart eBay (Nasdaq: EBAY  ) , which it counts as an investor, as its MercadoPago payment processor resembles eBay's PayPal.

The two e-commerce players don't butt heads in the region, in part because of a strategic alliance from many years ago, when MercadoLibre acquired eBay's Brazilian subsidiary and eBay agreed not to compete in the region. That agreement expired way back in September 2006, so eBay could potentially enter but has kept its distance so far.

Argentina and Venezuela were the stars of the show, with each country putting up 70% and 64% growth, respectively. Mexico growth has reaccelerated to 31% -- levels not seen since 2009. Total confirmed registered users continue to grow, adding nearly a quarter to its ranks this year to 65.8 million users.

Operating cash flow rose to $89.4 million, and the company is giving some of that cash back to shareholders in the form of an increased quarterly dividend. MercadoLibre is boosting it by 36% to almost $0.11 per share, in line with its goal of increasing its dividend rate in lockstep with bottom-line growth.

The middle class in Latin America is booming, and MercadoLibre has no signs of slowing down, which is but one reason this Rule Breaker has delivered multibagger returns and sits on my CAPS scorecard next to an outperform CAPScall.

Looking for another way to play the hot growth in Latin America? Look no further, because we've just released a new special free report that names The Motley Fool's Top Stock of 2012, which is a retail play on Latin America's emerging economy. This stock is also a recent Rule Breakers recommendation, and its business model bears an uncanny resemblance to two domestic retail titans that you're already familiar with. Get the free report now.

Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of eBay and MercadoLibre and writing puts in eBay. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/24/2016 4:00 PM
MELI $172.82 Down -1.11 -0.64%
MercadoLibre CAPS Rating: *****
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eBay CAPS Rating: ****