This miercoles por la noche -- Wednesday night, for us Anglophiles -- we're getting a first-quarter earnings report all the way from Argentina. It's MercadoLibre (Nasdaq: MELI), the biggest online auction outfit in Latin America, and this Fool has swapped his jingly cap for a gaucho hat to prepare for the report.

What Fools say:
Here's how MercadoLibre's CAPS rating stacks up against some of its peers and competitors:

Market Cap (millions)

Trailing P/E Ratio

CAPS Rating

eBay (Nasdaq: EBAY)

$35,130

102.6

***

Amazon.com (Nasdaq: AMZN)

$26,130

55.8

**

Mercadolibre

$1,660

204.2

****

Gmarket (Nasdaq: GMKT)

$1,130

32.4

****

Liquidity Services (Nasdaq: LQDT)

$264

24.0

***

Data taken from Motley Fool CAPS and Yahoo! Finance on 03/03/2008.

Marching ahead of the pack, shoulder-to-shoulder with South Korean counterpart Gmarket, the company shows us the appeal of localized auction houses -- Rioplatense villas and Joseon pagodas alike.

Simply put, the CAPS bulls on this stock see the early days of eBay playing out all over again, and predict a similar skyrocketing business trajectory. The 'Bay or Amazon are mentioned many times over as prospective buyers of the whole company, and it's also a way to tap into the rampant growth we're seeing out of Latin America these days.

The bears point to (surprise!) unreasonable valuation -- even after a 54% price cut in the last two months.

What management does:
The operating margin trend is the real story here. The company is accelerating the share of operating profits quarter by quarter, while doing the same in sales growth.

Margins

6/2006

9/2006

12/2006

3/2007

6/2007

9/2007

Gross

78.3%

78.3%

76.8%

77.2%

77.4%

77.6%

Operating

2.9%

2.9%

10.4%

13.1%

16.9%

21.3%

Net

8.3%

8.3%

2.1%

3.4%

5.4%

8.4%

FCF/Revenue

7%

7%

7.8%

12.6%

11.2%

10.1%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Any Fool would relish the chance to get in on the next eBay in its early growth stages. For its leading market position in a high-margin business with powerful network effects, MercadoLibre made a spirited run for the title of best international stock for 2008, but eventually lost out to Cemex (NYSE: CX) and Sadia (NYSE: SDA). Nothing much has changed since then -- after all, the vote ended just three weeks ago. MercadoLibre is still a brilliant little company with oceans of growth ahead of it.

Will it be enough to justify the lofty stock price? It's hard to tell with such a short operating history, but Mercado does have the expertise of its more than 10% ownership by eBay to fall back on. Patience is a virtue, Fool.

Further Foolishness: