⁠Wall St Engine
JPMORGAN SEES FED RATE CUT IN DECEMBER VS SEPTEMBER PREVIOUSLY; SAYS US 🇺🇸RECESSION RISK IS NOW BELOW 50%
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⁠Wall St Engine
$UBER CEO DARA KHOSROWSHAHI: YOU WILL SEE AUTONOMOUS VEHICLES IN SAUDI ARABIA THIS YEAR https://t.co/EKunUUepGC
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⁠Wall St Engine
$AAPL IS WORKING ON TECH TO LET YOU CONTROL DEVICES WITH YOUR MIND

Partnering with brain-implant startup Synchron, Apple is testing a system that helps people with ALS or spinal injuries navigate iPhones and Vision Pro using brain signals. A full launch is still years away, but it's a major step toward hands-free control.
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⁠Wall St Engine
BOEING: LOOKING TO MAKE SAUDI PART OF F15EX SUPPLY CHAIN
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⁠Wall St Engine
AT LEAST FOUR CHINESE RARE EARTH MAGNET SUPPLIERS HAVE BEEN GRANTED EXPORT PERMITS BY BEIJING - SOURCES
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⁠Wall St Engine
APR. U.S. 🇺🇸 INFLATION DATA:

CPI 2.3% YoY, (Est. 2.4%)
CPI 0.2% MoM, (Est. 0.3%)

Core CPI 2.8% YoY, (Est. 2.8%)
Core CPI 0.2% MoM, (Est. 0.3%)
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⁠Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $MELI 🧘🏽‍♂️

•NTM P/E Ratio: 45.35x
•1-Year Mean: 47.96x

As you can see, $MELI appears to be trading near fair value

Going forward, investors can receive ~6% MORE in earnings per share 🧠***

Before we get into valuation, let’s take a look at why $MELI is a great business

BALANCE SHEET✅
•Cash & Short-Term Inv: $8.07B
•Long-Term Debt: $2.80B

$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 45x FFO Interest Coverage

RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.7%
•2023: 25.7%
•2024: 23.0%

RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•2024: 51.5%

$MELI has strong and improved return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2019: $2.30B
•2024: $20.78B
•CAGR: 55.30%

FREE CASH FLOW✅
•2019: $314.29M
•2024: $7.05B
•CAGR: 86.32%

NORMALIZED EPS✅
•2019: ($3.71)
•2024: $37.69

SHARE BUYBACKS❌
•2019 Shares Outstanding: 48.69M
•LTM Shares Outstanding: 50.70M

MARGINS🆗➡️✅
•LTM Gross Margins: 52.2%
•LTM Operating Margins: 12.8%
•LTM Net Income Margins: 9.2%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~6% MORE in EPS

Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 22.68% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (22.68%) required growth rate:

2025E: $49.42 (31.1% YoY)
2026E: $66.40 (34.3% YoY)
2027E: $87.62 (32.0% YoY)

$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2027 with $87.62 in EPS & see its CAGR potential assuming different multiples

40x P/E: $3505💵 … ~13.6% CAGR

38x P/E: $3330💵 … ~11.4% CAGR

36x P/E: $3154💵 … ~9.1% CAGR

34x P/E: $2979💵 … ~6.8% CAGR

As you can see, $MELI appears to have attractive return potential IF we assume >38x earnings (a multiple justified by its growth rate & moat)

$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum

Key factors contributing to its promising outlook include 🔑

1. Margin expansion

2. Unparalleled access to Latin America's burgeoning economy

3. Network effects & scale economic shared that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things

Those buying $MELI today at $2504💵 are buying it for a fair price, with little margin of safety — however, these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return

I consider $MELI a strong buy closer to $2250💵 (~10% below today’s price) where I can reasonably expect ~11% CAGR while assuming a conservative 34x end multiple, ensuring some margin of safety

#stocks #investing
___

𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 [...]

𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠Wall St Engine
Airfares dropped 2.8% from March, likely due to slowing demand airlines warned about. Groceries fell 0.4%—the biggest dip since Sept 2020—with drops in meat, eggs, cereal, and more. Eggs alone plunged 12.7%, the steepest fall since 1984, after the avian flu price surge.

APR. U.S. 🇺🇸 INFLATION DATA:

CPI 2.3% YoY, (Est. 2.4%)
CPI 0.2% MoM, (Est. 0.3%)

Core CPI 2.8% YoY, (Est. 2.8%)
Core CPI 0.2% MoM, (Est. 0.3%) - Wall St Engine
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⁠Wall St Engine
Still, No sign of tariff-driven inflation in the hard data. Core CPI soft, food-at-home down 0.4%, yields lower across the curve. Traders still pricing in 2 Fed cuts for 2025 (Sept & Oct).

Polymarket odds now lean toward 50bps of cuts, by end-of the year. https://t.co/2fB2GiRGeK
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⁠Wall St Engine
Elon Musk’s $TSLA Austin robotaxi launch is just weeks out, but as of last month, Tesla still hadn’t started testing cars without a human safety driver, per sources familiar with the program. https://t.co/CSJrZaR9AG
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⁠Wall St Engine
AT&T $T EXEC- WE DON'T SEE ANY NEAR-TERM 2025 IMPACTS FROM TARIFFS- JPM CONF CALL
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⁠Investing visuals
$NVDA vs $AMD: two companies powering the AI revolution. https://t.co/nTpsFc9m6w
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