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Mondelez International, Inc.(MDLZ - Analyst Report) is set to report its second-quarter 2013 results on Aug 7. Last quarter, it posted in-line results. Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

Mondelez has been underperforming, ever since it  spun off its North American grocery business into a separate independent company, Kraft Foods Group, Inc. (KRFT - Analyst Report), in October last year. Last quarter, the Oreo cookies and Cadbury chocolate maker’s organic top-line growth was below its long-term targets. Lower coffee pricing, capacity constraints in a number of markets and continued weakness in its gum business hurt organic-revenue growth in the quarter. Profits declined due to higher input costs and increased advertising spending.

Management expects that the second-quarter organic growth will be tempered again by lower coffee pricing and capacity constraints. We do not expect any improvement in profit in this quarter. The gum business is also expected to remain under pressure.

Mondelez’s biggest competitive disadvantage is its significant exposure to the slow growing Western European markets. We believe that the company is still in a transitional stage and it is likely to take some time to stabilize.

Earnings Whispers?

Our proven model does not conclusively show that Mondelez is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP:  Mondelez has a Zacks ESP of -2.86%.

Zacks Rank #4 (Sell): Mondelez carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum. Estimates have been mostly going downwards for Mondelez over the past 60 days.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Tyson Foods(TSN - Analyst Report), Earnings ESP of +11.86% and a Zacks #2 Rank (Buy)

Sanderson Farms (SAFM - Snapshot Report), Earnings ESP of +5.66% and a Zacks #3 Rank (Hold)

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