3 Reasons to Buy This Beaten-Down Stock on the Dip
The stock could reward patient investors.
Overview
Investors have sold off MercadoLibre's (NASDAQ: MELI) shares over the past year. Between rising competition in its e-commerce market in Latin America and worse-than-expected profits and margins, many are increasingly skeptical of the company's prospects. The stock has declined by 22% over the trailing-12-month period as a result. However, it may be too early to give up on MercadoLibre as there are good reasons to expect the business to bounce back eventually. Let's consider three of them.
In the first quarter, MercadoLibre's revenue increased by 49% year over year to $8.8 billion. However, the company's operating income dropped 20% year over year to $611 million, with its operating margin sliding by six percentage points to 6.9%. On the bottom line, MercadoLibre's earnings per share declined to $8.23, down from $9.74 in the prior-year quarter -- it came in below analyst estimates, sending the stock sharply lower.
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Originally published at www.fool.com.