Earnings Watch: Will MercadoLibre report blowout Q4 earnings? Earnings Watch: Will MercadoLibre report blowout Q4 earnings? Earnings Watch: Will MercadoLibre report blowout Q4 earnings?

Earnings Watch: Will MercadoLibre report blowout Q4 earnings?

Equities 5 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  The Q4 earnings season continues this week with another 120 major earnings releases. In this week's Earnings Watch we are zooming in on MercadoLibre, the big local e-commerce player in South America, which has the potential to become the Amazon of South America over the next 10 years. We take a look at their numbers and what to expect on Wednesday when the company reports Q4 earnings. We also highlight the other major earnings releases to watch this week for their potential to impact equity sentiment.


Earnings are continuing to be released with 120 earnings releases this week. Overall, the Q4 earnings season has shown the resilience and comeback of companies bolstering the positive sentiment in global equity markets. We recently said on our podcast that global earnings had recovered from the pandemic, but it seems that there was a data error and with the fixed numbers we are back to conclusion that Q4 earnings are up 3.4% q/q but still down 5.4% y/y for the MSCI World Index.

Is MercadoLibre the Amazon of South America?

MercadoLibre reports Q4 earnings Wednesday with analysts expecting revenue growth at 78% y/y. The fast growing e-commerce giant in South America is part of our e-commerce theme basket that we introduced on Friday. The e-commerce company was growing fast going into the pandemic but then experienced a steep growth decline in Q1 before rebounding strongly as lockdowns in every country fueled demand for online shopping. Given the strong Q4 results from Amazon and Alibaba last week, we are quite confident that MercadoLibre will deliver above consensus estimates. Current expectations are for FY20 revenue growth of 68% y/y, but we think it will end above 70%. The company is expected to deliver $842mn in free cash flow in 2020 and with an enterprise value of $93.6bn the valuation is aggressive, but also an indication of investor demand for predictable high growth companies within a strong long-term trend.

Source: Bloomberg

Our long-term view on MercadoLibre is that it will dominate broad e-commerce in South America over the next decade because the industry tends to be dominated by one big player enjoying all the economics of scale, and we also believe that there is a local element favouring MercadoLibre above Amazon as we have seen Amazon having problems in their internationalization. The key risks are obviously the volatile political situation in South America and the current high equity valuation which could mean lower expected returns despite high growth over the coming years.

Other earnings releases to watch next week

The list below shows the 30 most important earnings releases this week. Besides MercadoLibre which we have covered above, Toyota Motor being the world’s biggest carmaker will give valuable insights into consumer demand but also semiconductor shortage. Adyen reporting on Wednesday is important for sentiment of payment companies in general but in particularly technology stocks in Europe. Uber Technologies is part of the ‘bubble stocks’ segment with very aggressive valuation so an earnings miss could impact this segment. Disney reporting Thursday is relevant for Netflix and the overall demand for video streaming. AstraZeneca with all its troubles around its Covid-19 vaccine will obviously in focus on Thursday and the pressure has not been reduced following news yesterday that South Africa is halting vaccinations using the company’s vaccine as it is shown to not be effective against the South African mutation. Schneider Electric also reports on Thursday and is an important industrial conglomerate in Europe that sits in the middle of the global manufacturing rebound and potentially rising input costs.

Monday: SoftBank Group, Global Payments 

Tuesday: Total, Daikin Industries, S&P Global, Cisco, Fiserv, Fidelity National Information

Wednesday: Toyota Motor, Commonwealth Bank of America, MercadoLibre, Adyen, Heineken, Air Liquide, CME Group, General Motors, Uber Technologies, Coca-Cola, Equinor

Thursday: Zurich Insurance, PepsiCo, Duke Energy, Brookfield Asset Management, Disney, L’Oreal, Illumina, AstraZeneca, Schneider Electric

Friday: Enbridge, Dominion Energy

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.