- MELI Q1 Deep Dive: Strategic Investment Drives Revenue Growth but Compresses Margins
May 13, 2026
Latin American e-commerce and fintech company MercadoLibre (NASDAQ:MELI) reported Q1 CY2026 results exceeding the market’s revenue expectations , with sales up 49% year on year to $8.85 billion. Its non-GAAP profit of $8.23 per share was 2.9% below analysts’ consensus estimates.
Is now the time to buy MELI? Find out in our full research report (it’s free).
MercadoLibre (MELI) Q1 CY2026 Highlights:
Revenue: $8.85 billion vs analyst estimates of $8.36 billion (49% year-on-year growth, 5.8% beat) Adjusted EPS: $8.23 vs analyst expectations of $8.47 (2.9% miss) Adjusted EBITDA: $857 million vs analyst estimates of $849 million (9.7% margin, 0.9% beat) Operating Margin: 6.9%, down from 12.9% in the same quarter last year Unique Active Buyers: 84 million, up 17 million year on year Market Capitalization: $94.8 billion
StockStory’s Take
MercadoLibre’s first quarter was defined by rapid revenue growth and deliberate margin compression, prompting a negative market reaction. Management attributed the 49% year-over-year sales surge to successful strategic moves, notably the lower free shipping threshold in Brazil and targeted seller incentives. CFO Martin de Los Santos emphasized that investments in logistics and fintech, especially credit cards, are fueling both user acquisition and ecosystem engagement. However, he acknowledged that these choices, while yielding top-line momentum, contributed to a lower operating margin as the company prioritizes long-term gains over near-term profitability.
Looking ahead, MercadoLibre’s executive team signaled that the current investment-heavy approach will persist through 2026, with expanded fintech offerings and deeper logistics capabilities remaining central priorities. Management believes that scaling the credit portfolio and broadening free shipping options across markets will further entrench the platform’s leadership. De Los Santos stated, “We are not trying to optimize short-term margins. We are investing for the long term,” and highlighted that continued improvements in underwriting and cross-selling will be key to sustaining ecosystem growth despite ongoing margin pressures.
Key Insights from Management’s Remarks
Management credited the quarter’s strong revenue growth to the compounding effects of strategic investments in shipping, marketplace incentives, and fintech cross-sell, while noting that margin decline stemmed from bold reinvestment decisions.
Free shipping and logistics expansion: Lowering the free shipping threshold in Brazil drove significant buyer engagement and volume growth, with unit shipping costs declining 17% year-over-year as scale improved logistics efficiency. Fintech cross-sell momentum: The credit card initiative continued to gain traction, nearly doubling the credit portfolio and increasing monthly active users by 68%. This cross-sell between marketplace and fintech users is deepening engagement and loyalty. Targeted seller incentives: MercadoLibre implemented selective take rate reductions for Brazilian sellers offering competitive prices. Management believes these measures have stimulated platform activity without broad-based fee cuts, supporting both supply and buyer value. Margin compression explained: The operating margin decline was primarily attributed to increased provisions and investments in longer-duration and higher-risk credit products, especially in Brazil. Management noted this is a deliberate tradeoff to capture growth opportunities. AI-driven product improvements: The rollout of large language models (LLMs) in search and discovery functions across key markets has improved conversion rates, ad performance, and user engagement, contributing to marketplace growth.
Story Continues
Drivers of Future Performance
MercadoLibre expects continued revenue growth to be driven by sustained investment in logistics, fintech expansion, and ecosystem engagement, although these priorities may keep margins at current levels.
Fintech and credit scaling: Management plans to further scale the credit card and broader lending portfolio, particularly in Brazil, Mexico, and Argentina. While this drives revenue and user growth, it requires ongoing provisioning and careful risk management, which could weigh on near-term margins. Marketplace investment and logistics: Ongoing investments in logistics infrastructure, fulfillment, and targeted seller incentives are expected to drive higher transaction volumes, but also necessitate sustained capital outlays and could pressure profitability in the near term. Competitive and macro risks: Management is monitoring competitive dynamics, especially in Brazil, and potential macroeconomic headwinds such as labor and energy cost inflation. While these are not seen as immediate threats, they could influence both cost structure and user behavior in coming quarters.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be watching (1) the pace of adoption and profitability in MercadoLibre’s expanding credit card and lending initiatives, (2) the ongoing impact of logistics and free shipping investments on both user engagement and cost structure, and (3) the effectiveness of targeted seller incentives in maintaining volume growth amid heightened competition. Progress in AI-driven search and macroeconomic developments will also be important signals of execution quality.
MercadoLibre currently trades at $1,631, down from $1,875 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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- MercadoLibre (MELI) Stock Trades Down, Here Is Why
May 12, 2026
What Happened?
Shares of latin American e-commerce and fintech company MercadoLibre (NASDAQ:MELI) fell 12.3% in the afternoon session after the company reported first-quarter 2026 results where strong revenue growth was overshadowed by declining profitability, sparking investor concerns about rising costs.
Management revealed that a significant percentage of the margin compression came from higher loan-loss provisions tied to the rapid scaling of MercadoLibre's credit card business. The company issued 2.7 million new credit cards in the quarter, credit card payment volume grew, and the total credit portfolio nearly doubled year-over-year. This reframes the margin story from "costs are out of control" to "MercadoLibre is in an investment phase by design."
When a fintech grows its credit book this fast, accounting rules force it to book loan-loss provisions upfront against loans that have not yet seasoned, meaning reported profit takes the hit today, while interest income arrives over the life of the loans.
CEO Marcos Galperin's team also chose to step up spending on free shipping in Brazil, and on first-party logistics, in a trade of margin for market share against Amazon and Shein. Management explicitly said margins will stay near current levels in the near term, removing any near-term recovery catalyst, which likely contributed to the stock’s decline as some investors choose to stay cautious.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy MercadoLibre? Access our full analysis report here, it’s free.
What Is The Market Telling Us
MercadoLibre’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. But moves this big are rare even for MercadoLibre and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 10% on the news that the company reported mixed fourth quarter results.
While sales came in strong and well ahead of analysts' estimates, earnings fell short. Operating margins fell to 10.1%, down from 13.5% in the previous year. Investors were likely concerned that heavy spending on logistics, AI expansion, and marketing is eating into profits. Overall, we think this was a mixed quarter with some key metrics above expectations. The stock's reaction suggests the market was expecting more.
MercadoLibre is down 17.5% since the beginning of the year, and at $1,629 per share, it is trading 37.7% below its 52-week high of $2,614 from June 2025. Despite the year-to-date decline, investors who bought $1,000 worth of MercadoLibre’s shares 5 years ago would now be looking at an investment worth $1,177.
Story Continues
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- MercadoLibre Inc (MELI) Shares Fall 3.3% -- What GF Score of 82 Tells Investors
May 12, 2026 · gurufocus.com
On May 12, 2026, MercadoLibre Inc (MELI) shares fell 3.3%, bringing the current price to $1578.78. The stock has experienced a significant decline, with a 52-we
- 3 Stocks That May Be Priced Below Their Estimated Value In May 2026
May 12, 2026
The United States market has shown robust performance, rising 2.6% over the last week and 26% over the past year, with earnings expected to grow by 17% annually. In such a thriving environment, identifying stocks that are potentially priced below their estimated value can offer investors opportunities for growth as they seek to capitalize on undervalued assets amidst positive market conditions.
Top 10 Undervalued Stocks Based On Cash Flows In The United States
Name Current Price Fair Value (Est) Discount (Est) Western Digital (WDC) $515.83 $1001.92 48.5% Tuniu (TOUR) $5.71 $11.41 50% Sea (SE) $84.87 $164.01 48.3% Rayonier (RYN) $20.31 $40.03 49.3% MercadoLibre (MELI) $1557.30 $3035.20 48.7% Lazard (LAZ) $45.98 $89.64 48.7% Kodiak Gas Services (KGS) $75.52 $150.36 49.8% Janus Living (JAN) $27.23 $54.11 49.7% iRhythm Holdings (IRTC) $116.84 $233.64 50% CVR Energy (CVI) $34.88 $67.50 48.3%
Click here to see the full list of 141 stocks from our Undervalued US Stocks Based On Cash Flows screener.
We're going to check out a few of the best picks from our screener tool.
Cohu
Overview: Cohu, Inc. operates through its subsidiaries to offer semiconductor test equipment and services across various regions including the United States, Taiwan, China, Malaysia, the Philippines, Singapore, and internationally with a market cap of approximately $2.34 billion.
Operations: The company's revenue primarily comes from its Semiconductor Test & Inspection segment, which generated $481.28 million.
Estimated Discount To Fair Value: 33.7%
Cohu is trading at US$51.28, significantly below its estimated future cash flow value of US$77.37, indicating potential undervaluation based on discounted cash flows. Despite a net loss of US$12.07 million in Q1 2026, earnings are forecast to grow annually by over 100%. Recent sales growth and strategic orders in the high-performance computing market highlight Cohu's expanding footprint and potential for profitability within three years, supported by robust demand for its Eclipse platform.
Upon reviewing our latest growth report, Cohu's projected financial performance appears quite optimistic. Click to explore a detailed breakdown of our findings in Cohu's balance sheet health report.COHU Discounted Cash Flow as at May 2026
BlackSky Technology
Overview: BlackSky Technology Inc. is a space-based technology company operating in the United States and internationally, with a market cap of $1.46 billion.
Operations: The company's revenue segment includes the Blacksky Division, which generated $97.81 million.
Estimated Discount To Fair Value: 24.7%
BlackSky Technology is trading at US$41.38, more than 20% below its estimated future cash flow value of US$54.97, suggesting potential undervaluation. The company forecasts revenue growth of 24.1% annually and expects to become profitable within three years, outpacing the market average. Recent earnings guidance was raised due to strong sales performance and increased demand for Gen-3 solutions, despite a net loss in Q1 2026 compared to the previous year.
Story Continues
The analysis detailed in our BlackSky Technology growth report hints at robust future financial performance. Get an in-depth perspective on BlackSky Technology's balance sheet by reading our health report here.BKSY Discounted Cash Flow as at May 2026
Beazer Homes USA
Overview: Beazer Homes USA, Inc. operates as a homebuilder in the United States with a market capitalization of approximately $496.06 million.
Operations: The company's revenue segments consist of Homebuilding in the East generating $545.18 million, Homebuilding in the West contributing $1.26 billion, and Homebuilding in the Southeast with $301.52 million.
Estimated Discount To Fair Value: 41.9%
Beazer Homes USA is trading at US$25.16, significantly below its estimated future cash flow value of US$43.29, indicating undervaluation based on discounted cash flow analysis. Despite a recent net loss and declining revenue, the company anticipates rapid earnings growth of 176.76% annually and aims to become profitable within three years. The cancellation of a proposed acquisition by Dream Finders Homes underscores Beazer's belief in its higher intrinsic value than the offer suggested.
According our earnings growth report, there's an indication that Beazer Homes USA might be ready to expand. Navigate through the intricacies of Beazer Homes USA with our comprehensive financial health report here.BZH Discounted Cash Flow as at May 2026
Turning Ideas Into Actions
Discover the full array of 141 Undervalued US Stocks Based On Cash Flows right here. Invested in any of these stocks? Simplify your portfolio management with Simply Wall St and stay ahead with our alerts for any critical updates on your stocks. Take control of your financial future using Simply Wall St, offering free, in-depth knowledge of international markets to every investor.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include COHUBKSY and BZH.
This article was originally published by Simply Wall St.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- MercadoLibre Stock Continues to Struggle to Find Traction. Is the Stock a Buy on the Dip, or Is It Time to Throw in the Towel?
May 12, 2026
Shares of MercadoLibre (NASDAQ: MELI) sank even as the company yet again reported robust revenue growth. Unfortunately for investors, MercadoLibre's stock has largely run in place over the past five years, up less than 20%, while revenue has risen more than sevenfold from $4 billion in 2020 to $28.9 billion in 2025.
That's a huge disconnect between the Latin American e-commerce company's operational performance and its stock price. MercadoLibre remains in investment mode to drive growth, and investors clearly haven't been happy with that decision. The stock is now down around 18% on the year.
Will AI create the world's first trillionaire? Our team just released a report on a little-known company, called an "Indispensable Monopoly," providing the critical technology Nvidia and Intel both need.
Continue »
Let's dig into the company's Q1 results and prospects to see whether now is the time to buy the stock or throw in the towel.
Revenue continues to soar, but margin shrinks
While MercadoLibre's revenue grabbed headlines, investors were more concerned about the company's operating margins, which shrank to 6.9%. However, the company made it clear that it was not willing to manage short-term margins at the expense of investing in growth initiatives to placate investors.
MercadoLibre said it has a "once-in-a-generation opportunity to transform how hundreds of millions of Latin Americans shop, pay, and access financial services," and it is going to aggressively invest to capture this opportunity. Management further noted that there are no plans to change the current level of investment in the near term.
In terms of revenue growth, its investments are paying off. For the first quarter, MercadoLibre's revenue surged 49%, or 46% in constant currencies, to $8.85 billion. That was its strongest revenue growth since Q2 2022 and easily ahead of the $8.32 billion consensus. Its earnings per share (EPS) fell 16% to $8.23 but topped the $8.20 consensus.
Among the investments weighing on profitability are the company lowering its free shipment threshold in Brazil and building out its logistics and fulfillment infrastructure in less mature markets. In addition, the company also cut take rates in Brazil for sellers that are competitively priced. It is also aggressively investing in building out its fintech and credit card portfolio.
Gross merchandise volume (GMV), which is the value of goods sold through its e-commerce platform, jumped 42% to $19 billion. Its largest market, Brazil, saw a 38% currency-neutral jump in GMV, while the number of items sold climbed 56%, double the growth rate before it lowered its free-shipping threshold. Mexico's GMV climbed 28% on a currency-neutral basis, while Argentina's GMV jumped 41% and Chile's GMV soared 40%.
Story Continues
MercadoLibre also continues to see strong growth in its fintech business, with monthly active users increasing 29%. The company saw its credit card portfolio once again nearly double year over year to $14.6 billion, as it issued 2.7 million new cards just in the quarter. Non-performing loans in its credit card portfolio, meanwhile, were stable year over year at 8%.
At the same time, its assets under management surged 77% to $20 billion. Total payment volumes through Mercado Pago climbed 50%, or 55% in constant currencies, to $87.2 billion.Image source: The Motley Fool.
Is MercadoLibre stock a buy?
MercadoLibre is building a mega e-commerce and fintech service platform that's unrivaled in Latin America. The company sees the potential opportunity in front of it to grow these platforms, and it's not unlike how Amazon grew its e-commerce business and SoFi built its fintech service operations in the U.S. The company is doing the right thing by investing in its business, which should pay off in the long run.
From a valuation perspective, the company trades at a forward price-to-earnings ratio (P/E) of 24 based on 2027 analyst estimates and a price/earnings-to-growth (PEG) ratio of below 0.8 (a PEG under 1 is typically considered undervalued). That's attractive, especially for a company not currently trying to optimize profits.
As such, I'd be a buyer of the stock, although I think investors will need to continue to be patient.
Should you buy stock in MercadoLibre right now?
Before you buy stock in MercadoLibre, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MercadoLibre wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $460,826!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,345,285!*
Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2026.
Geoffrey Seiler has positions in Amazon and MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.
MercadoLibre Stock Continues to Struggle to Find Traction. Is the Stock a Buy on the Dip, or Is It Time to Throw in the Towel? was originally published by The Motley Fool
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- 3 Reason to Buy MercadoLibre Stock Right Now
May 12, 2026
MercadoLibre(NASDAQ: MELI) stock got crushed over the past few months. It's been an incredible market beater over the past few years, but its past two earnings reports haven't made the market happy. Profitability showed declines, and management explained that pressure is coming from investments that will pay off in the long term, as well as from seasonality and growth in the credit business.
Is this an opportunity to buy the stock on the dip? I say yes. Here are three reasons to buy it right now.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
1. Retail is shifting online in the markets MercadoLibre serves
Long-term investors should keep the big picture in mind. MercadoLibre is growing rapidly in an underpenetrated e-commerce market, and as the dominant player in the region, it's driving online adoption.Image source: Getty Images.
Revenue increased 49% year over year in the first quarter, the fastest growth in four years. In Brazil, which is the largest country in Latin America, growth is accelerating, and MercadoLibre added 17 million unique active customers to its platform. Total unique active members increased 26% over last year, and gross merchandise volume was up 42%. "When your business is behaving like this, we believe the right response is not to harvest -- it is to invest," management said.
It pointed out that the average American makes 41 purchases online annually, while the average Latin American makes only seven. That puts the company in a unique position to harness this once-in-a-generation opportunity to go all in and establish itself as the unrivaled leader.
2. MercadoLibre is seeing massive opportunities in fintech
It's a similar story for the company's fintech business. This was started as an ancillary business to help underbanked customers pay for their purchases. Still, it has ballooned into a massive business with huge opportunities as digital players like MercadoLibre disrupt the financial status quo. Total payment volume increased 50% year over year in the first quarter, and monthly active users were up 29%.
While it began as a simple digital wallet, MercadoLibre has turned it into a full financial app and also offers credit cards and other credit products. The credit card portfolio increased 107% year over year in the first quarter, and the company added 2.7 million cards. The total credit portfolio increased 87% year over year in the quarter. The credit card business directly impacts marketplace growth, and having the card available drives a strong flywheel effect, boosting growth across both segments.
Story Continues
Management has many plans to grow this business, including opening what it expects to be the largest digital bank in both Mexico and Argentina.
3. The stock just got much cheaper
Despite strong results, the stock fell after the first-quarter report and now trades down 19% year to date. Operating income and margin fell, as did net income and margin.
At the current price, MercadoLibre stock trades at a three-year low of 24x forward one-year earnings. That's an excellent entry point for new investors or to add to your position, and patience here should pay off.
Should you buy stock in MercadoLibre right now?
Before you buy stock in MercadoLibre, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MercadoLibre wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2026.
Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.
3 Reason to Buy MercadoLibre Stock Right Now was originally published by The Motley Fool
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- 3 Reason to Buy MercadoLibre Stock Right Now
May 12, 2026
Key Points
E-commerce growth is accelerating, and management is investing in the business to position itself as the clear leader. The fintech business complements the e-commerce business, and the credit portfolio in Q1 increased 87% year over year. MercadoLibre stock is trading at a three-year low on a forward price-to-earnings basis.10 stocks we like better than MercadoLibre ›
MercadoLibre(NASDAQ: MELI) stock got crushed over the past few months. It's been an incredible market beater over the past few years, but its past two earnings reports haven't made the market happy. Profitability showed declines, and management explained that pressure is coming from investments that will pay off in the long term, as well as from seasonality and growth in the credit business.
Is this an opportunity to buy the stock on the dip? I say yes. Here are three reasons to buy it right now.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
1. Retail is shifting online in the markets MercadoLibre serves
Long-term investors should keep the big picture in mind. MercadoLibre is growing rapidly in an underpenetrated e-commerce market, and as the dominant player in the region, it's driving online adoption.
Image source: Getty Images.
Revenue increased 49% year over year in the first quarter, the fastest growth in four years. In Brazil, which is the largest country in Latin America, growth is accelerating, and MercadoLibre added 17 million unique active customers to its platform. Total unique active members increased 26% over last year, and gross merchandise volume was up 42%. "When your business is behaving like this, we believe the right response is not to harvest -- it is to invest," management said.
It pointed out that the average American makes 41 purchases online annually, while the average Latin American makes only seven. That puts the company in a unique position to harness this once-in-a-generation opportunity to go all in and establish itself as the unrivaled leader.
2. MercadoLibre is seeing massive opportunities in fintech
It's a similar story for the company's fintech business. This was started as an ancillary business to help underbanked customers pay for their purchases. Still, it has ballooned into a massive business with huge opportunities as digital players like MercadoLibre disrupt the financial status quo. Total payment volume increased 50% year over year in the first quarter, and monthly active users were up 29%.
While it began as a simple digital wallet, MercadoLibre has turned it into a full financial app and also offers credit cards and other credit products. The credit card portfolio increased 107% year over year in the first quarter, and the company added 2.7 million cards. The total credit portfolio increased 87% year over year in the quarter. The credit card business directly impacts marketplace growth, and having the card available drives a strong flywheel effect, boosting growth across both segments.
Management has many plans to grow this business, including opening what it expects to be the largest digital bank in both Mexico and Argentina.
3. The stock just got much cheaper
Despite strong results, the stock fell after the first-quarter report and now trades down 19% year to date. Operating income and margin fell, as did net income and margin.
At the current price, MercadoLibre stock trades at a three-year low of 24x forward one-year earnings. That's an excellent entry point for new investors or to add to your position, and patience here should pay off.
Should you buy stock in MercadoLibre right now?
Before you buy stock in MercadoLibre, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MercadoLibre wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2026.
Jennifer Saibil has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
- 3 Stocks That May Be Trading Below Their Estimated Value In May 2026
May 12, 2026
Over the last 7 days, the United States market has risen by 2.6%, contributing to a remarkable 26% increase over the past year, with earnings anticipated to grow by 17% per annum in the coming years. In this thriving environment, identifying stocks that may be trading below their estimated value can offer investors potential opportunities for growth and value appreciation.
Top 10 Undervalued Stocks Based On Cash Flows In The United States
Name Current Price Fair Value (Est) Discount (Est) Western Digital (WDC) $515.83 $1001.92 48.5% Tuniu (TOUR) $5.71 $11.41 50% Sea (SE) $84.87 $164.01 48.3% Rayonier (RYN) $20.31 $40.03 49.3% MercadoLibre (MELI) $1557.30 $3035.20 48.7% Lazard (LAZ) $45.98 $89.64 48.7% Kodiak Gas Services (KGS) $75.52 $150.36 49.8% Janus Living (JAN) $27.23 $54.11 49.7% iRhythm Holdings (IRTC) $116.84 $233.64 50% CVR Energy (CVI) $34.88 $67.50 48.3%
Click here to see the full list of 141 stocks from our Undervalued US Stocks Based On Cash Flows screener.
Here's a peek at a few of the choices from the screener.
Western Digital
Overview: Western Digital Corporation develops, manufactures, and sells data storage devices and solutions based on hard disk drive technology across various regions including the United States, Asia, Europe, the Middle East, and Africa with a market cap of approximately $165.45 billion.
Operations: The company generates revenue from its Hard Disk Drives (HDD) segment, amounting to $11.78 billion.
Estimated Discount To Fair Value: 48.5%
Western Digital appears undervalued based on cash flows, trading 48.5% below its estimated fair value of US$1001.92 per share with a current price of US$515.83. Recent earnings showed significant growth, with Q3 net income rising to US$3.21 billion from US$520 million year-over-year, indicating strong cash flow generation. The company forecasts robust revenue and profit growth exceeding market averages, despite recent insider selling activity that may warrant caution for potential investors.
The analysis detailed in our Western Digital growth report hints at robust future financial performance. Delve into the full analysis health report here for a deeper understanding of Western Digital.WDC Discounted Cash Flow as at May 2026
Kodiak Gas Services
Overview: Kodiak Gas Services, Inc. operates by providing contract compression infrastructure for the oil and gas industry in the United States, with a market cap of $6.15 billion.
Operations: Kodiak Gas Services generates revenue primarily from Contract Services, which account for $1.18 billion, alongside Other Services contributing $126.83 million.
Estimated Discount To Fair Value: 49.8%
Kodiak Gas Services is trading at a significant discount, 49.8% below its estimated future cash flow value of US$150.36 per share. Despite slower revenue growth forecasts compared to the broader market, its earnings are projected to grow significantly faster than market averages over the next three years. However, recent insider selling and insufficient coverage of interest payments by earnings highlight potential financial concerns that investors should consider alongside its undervaluation based on cash flows.
Story Continues
Insights from our recent growth report point to a promising forecast for Kodiak Gas Services' business outlook. Take a closer look at Kodiak Gas Services' balance sheet health here in our report.KGS Discounted Cash Flow as at May 2026
Owens Corning
Overview: Owens Corning is a company that supplies residential and commercial building products across the United States, Europe, the Asia Pacific, and internationally, with a market cap of approximately $9.65 billion.
Operations: The company's revenue is primarily derived from its Roofing segment at $4.28 billion, followed by Insulation at $3.66 billion, and Doors at $2.06 billion.
Estimated Discount To Fair Value: 10.2%
Owens Corning trades at 10.2% below its estimated future cash flow value of US$133.43 per share, indicating it is undervalued based on cash flows. Despite high debt levels and a dividend not well covered by earnings, its projected profitability and return on equity are expected to improve significantly over the next three years. However, recent earnings reports show declining sales and net losses, which could impact short-term financial performance despite positive long-term forecasts.
Our expertly prepared growth report on Owens Corning implies its future financial outlook may be stronger than recent results. Dive into the specifics of Owens Corning here with our thorough financial health report.OC Discounted Cash Flow as at May 2026
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include WDCKGS and OC.
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