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Mondelez International, Inc. (MDLZ - Analyst Report) is set to report first-quarter 2014 results on May 7. Last quarter, the company delivered a negative earnings surprise of 5.56%.

Let’s see how things are shaping up for this announcement.

Factors to Consider this Quarter

Mondelez has been reporting soft top-line results ever since it split from Kraft Foods Group, Inc. (KRFT - Analyst Report) in Oct 2012. Global snacking category slowdown, volatility in some key markets and continuous slide in coffee prices have been weighing on the company’s top line. Mondelez’s categories have slowed down in 2013 and are not expected to accelerate much in the near term. The company’s gum business has also been down for the last few quarters, mainly in the developed nations such as the U.S. and Europe.

Though the company expects to do better in 2014, the first quarter is expected to be tough as most of the headwinds that hurt results in the second half of 2013 are expected to persist.

Revenues are expected to grow in the range of 2–3% in the first quarter, lower than full-year expectations. Continued biscuit weakness in China, lower coffee pricing and shift in Easter timing to the second quarter are expected to hurt first-quarter sales. Moreover, management expects to increase pricing across most geographies in the first quarter to cover higher commodity costs and currency headwinds. Increased pricing is expected to hurt volumes in the quarter.

Though sales have been slower, Mondelez has delivered relatively better margins   through cost savings and productivity improvement.

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 and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Negative Zacks ESP: The Earnings ESP is -6.06%.

Zacks Rank: Mondelez has a Zacks Rank #2 (Buy). However, the favorable rank when combined with a negative ESP makes surprise prediction difficult.

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.

Other Stocks to Consider

Other consumer stapled stocks that have both a positive Earnings ESP and a favorable Zacks Rank are:

The J. M. Smucker Company (SJM - Analyst Report) with Earnings ESP of +1.72% and a Zacks Rank #3 (Hold)

Diamond Foods, Inc. (DMND - Analyst Report), with Earnings ESP of +6.67% and a Zacks Rank #3.

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