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Why Is Mondelez (MDLZ) Up 8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Mondelez (MDLZ - Free Report) . Shares have added about 8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mondelez due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Mondelez International posted impressive third-quarter 2022 numbers. Adjusted earnings were 74 cents per share, which increased 15.7% year over year on a constant-currency (cc) basis. The metric surpassed the Zacks Consensus Estimate of 68 cents per share. The year-over-year upside was backed by reduced outstanding shares, decreased taxes, solid operating gains and higher income from equity method investments. This was partly countered by the elevated interest expenses.
Net revenues advanced 8.1% to $7,763 million, which beat the Zacks Consensus Estimate of $7,507 million. The uptick was driven by the strong organic net revenue growth of 12.1% and increased sales from the Chipita buyout, somewhat negated by currency headwinds. Favorable volumes and pricing contributed to organic net revenues.
Revenues from emerging markets increased 19.7% to $3,094 million, while rising 24.4% on an organic basis. Revenues from developed markets moved up 1.5% to $4,669 million, while increasing 5.2% on an organic basis.
Region-wise, revenues in Latin America, Asia, the Middle East & Africa, and North America increased 21.6%, 4.6%, and 19.6% year over year, respectively. Meanwhile, the Europe region’s revenues declined 2.4% year over year. On an organic basis, revenues increased 31.6%, 14.6%, 5.2% and 12% in the above-mentioned regions, respectively.
The adjusted gross profit ascended to $351 million at cc. The adjusted gross profit margin contracted by 100 basis points (bps) to 37.4% due to increased raw material and transportation costs, and an adverse mix. These were somewhat negated by favorable pricing. Mondelez’s adjusted operating income rose $118 million at cc. The adjusted operating income margin contracted by 110 bps to 16.1% due to inflated input costs and an adverse mix, largely countered by SG&A leverage and favorable pricing.
Other Financials & Guidance
The company ended the quarter with cash and cash equivalents of $2,177 million, long-term debt of $19,811 million, and total equity of $26,670 million. The company generated net cash from operating activities of $2,516 million in the nine months ended Sep 30, 2022. Free cash flow was $1.9 billion for the same period. Management expects a free cash flow of more than $3 billion for 2022. During the quarter, the company distributed $800 million to shareholders through cash dividends and share buybacks.
Driven by the solid quarterly results and the continued momentum in the snacks business, management raised its guidance for 2022. For 2022, management expects organic net revenues of more than 10% compared with the more than 8% growth stated earlier. The company updated the view on the sturdy year-to-date performance.
It envisions a 10% increase in adjusted earnings per share or EPS at cc compared with the prior mentioned mid to high-single-digit growth. Currency movements are likely to negatively impact net revenues by 6.4% and adjusted EPS by 26 cents in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Mondelez has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Mondelez has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Mondelez belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Kraft Heinz (KHC - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Kraft reported revenues of $6.51 billion in the last reported quarter, representing a year-over-year change of +2.9%. EPS of $0.63 for the same period compares with $0.65 a year ago.
Kraft is expected to post earnings of $0.78 per share for the current quarter, representing a year-over-year change of -1.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Kraft has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Mondelez (MDLZ) Up 8% Since Last Earnings Report?
It has been about a month since the last earnings report for Mondelez (MDLZ - Free Report) . Shares have added about 8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mondelez due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Mondelez Q3 Earnings & Sales Beat Estimates, View Hiked
Mondelez International posted impressive third-quarter 2022 numbers. Adjusted earnings were 74 cents per share, which increased 15.7% year over year on a constant-currency (cc) basis. The metric surpassed the Zacks Consensus Estimate of 68 cents per share. The year-over-year upside was backed by reduced outstanding shares, decreased taxes, solid operating gains and higher income from equity method investments. This was partly countered by the elevated interest expenses.
Net revenues advanced 8.1% to $7,763 million, which beat the Zacks Consensus Estimate of $7,507 million. The uptick was driven by the strong organic net revenue growth of 12.1% and increased sales from the Chipita buyout, somewhat negated by currency headwinds. Favorable volumes and pricing contributed to organic net revenues.
Revenues from emerging markets increased 19.7% to $3,094 million, while rising 24.4% on an organic basis. Revenues from developed markets moved up 1.5% to $4,669 million, while increasing 5.2% on an organic basis.
Region-wise, revenues in Latin America, Asia, the Middle East & Africa, and North America increased 21.6%, 4.6%, and 19.6% year over year, respectively. Meanwhile, the Europe region’s revenues declined 2.4% year over year. On an organic basis, revenues increased 31.6%, 14.6%, 5.2% and 12% in the above-mentioned regions, respectively.
The adjusted gross profit ascended to $351 million at cc. The adjusted gross profit margin contracted by 100 basis points (bps) to 37.4% due to increased raw material and transportation costs, and an adverse mix. These were somewhat negated by favorable pricing. Mondelez’s adjusted operating income rose $118 million at cc. The adjusted operating income margin contracted by 110 bps to 16.1% due to inflated input costs and an adverse mix, largely countered by SG&A leverage and favorable pricing.
Other Financials & Guidance
The company ended the quarter with cash and cash equivalents of $2,177 million, long-term debt of $19,811 million, and total equity of $26,670 million. The company generated net cash from operating activities of $2,516 million in the nine months ended Sep 30, 2022. Free cash flow was $1.9 billion for the same period. Management expects a free cash flow of more than $3 billion for 2022. During the quarter, the company distributed $800 million to shareholders through cash dividends and share buybacks.
Driven by the solid quarterly results and the continued momentum in the snacks business, management raised its guidance for 2022. For 2022, management expects organic net revenues of more than 10% compared with the more than 8% growth stated earlier. The company updated the view on the sturdy year-to-date performance.
It envisions a 10% increase in adjusted earnings per share or EPS at cc compared with the prior mentioned mid to high-single-digit growth. Currency movements are likely to negatively impact net revenues by 6.4% and adjusted EPS by 26 cents in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Mondelez has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Mondelez has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Mondelez belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Kraft Heinz (KHC - Free Report) , has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Kraft reported revenues of $6.51 billion in the last reported quarter, representing a year-over-year change of +2.9%. EPS of $0.63 for the same period compares with $0.65 a year ago.
Kraft is expected to post earnings of $0.78 per share for the current quarter, representing a year-over-year change of -1.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Kraft has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.