MercadoLibre (MELI) vs. Liberty Interactive Corporation (NASDAQ:LVNTA) Critical Review

Liberty Interactive Corporation (NASDAQ: LVNTA) and MercadoLibre (NASDAQ:MELI) are both mid-cap retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitabiliy, risk, analyst recommendations, institutional ownership, dividends and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Liberty Interactive Corporation and MercadoLibre, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Liberty Interactive Corporation 0 1 3 0 2.75
MercadoLibre 1 6 5 0 2.33

Liberty Interactive Corporation presently has a consensus target price of $55.25, indicating a potential upside of 1.54%. MercadoLibre has a consensus target price of $261.67, indicating a potential downside of 5.23%. Given Liberty Interactive Corporation’s stronger consensus rating and higher probable upside, research analysts plainly believe Liberty Interactive Corporation is more favorable than MercadoLibre.

Institutional & Insider Ownership

89.6% of Liberty Interactive Corporation shares are owned by institutional investors. Comparatively, 91.3% of MercadoLibre shares are owned by institutional investors. 0.4% of MercadoLibre shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Liberty Interactive Corporation and MercadoLibre’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Liberty Interactive Corporation $289.00 million 16.09 -$22.00 million $10.62 5.12
MercadoLibre $960.69 million 12.69 $259.37 million $3.50 78.89

MercadoLibre has higher revenue and earnings than Liberty Interactive Corporation. Liberty Interactive Corporation is trading at a lower price-to-earnings ratio than MercadoLibre, indicating that it is currently the more affordable of the two stocks.

Dividends

MercadoLibre pays an annual dividend of $0.60 per share and has a dividend yield of 0.2%. Liberty Interactive Corporation does not pay a dividend. MercadoLibre pays out 17.1% of its earnings in the form of a dividend.

Risk and Volatility

Liberty Interactive Corporation has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, MercadoLibre has a beta of 2.03, indicating that its share price is 103% more volatile than the S&P 500.

Profitability

This table compares Liberty Interactive Corporation and MercadoLibre’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Liberty Interactive Corporation 416.61% 10.44% 3.58%
MercadoLibre 16.10% 41.12% 13.09%

Summary

MercadoLibre beats Liberty Interactive Corporation on 10 of the 16 factors compared between the two stocks.

About Liberty Interactive Corporation

Liberty Interactive Corporation (Liberty) owns interests in subsidiaries and other companies, which are engaged in the video and online commerce industries. Through its subsidiaries and affiliates, the Company operates in North America, Europe and Asia. Its businesses and assets include its consolidated subsidiaries QVC, Inc. (QVC), Backcountry.com, Inc. (Backcountry), Bodybuilding.com, LLC (Bodybuilding), CommerceHub and Evite, Inc. (Evite) and its equity affiliates Expedia, Inc. (Expedia), HSN, Inc. (HSN), FTD Companies, Inc. (FTD), Interval Leisure Group, Inc. (Interval Leisure Group) and LendingTree, Inc. (LendingTree). QVC markets and sells a variety of consumer products through live televised shopping and via its Websites and other media, including QVC.com. Backcountry is an e-retailer for outdoor adventure, cycling, action sports and motorcycle gear and clothing. Bodybuilding is an Internet retailer of sports, fitness, and nutritional supplements.

About MercadoLibre

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.

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