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Mondelez (MDLZ) Is Marching Ahead of the Industry: Here's Why
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Mondelez International, Inc. (MDLZ - Free Report) has shown resilience by leveraging its solid expansion, even amid inflated cost challenges. Strategic buyouts, efficient pricing and a focus on the core chocolate and biscuit categories have helped this Zacks Rank #3 (Hold) company drive growth.
This snack food and beverage product company has outperformed the industry as well as the Zacks Consumer Staples sector in the past six months. Shares of MDLZ have increased 9% against the industry’s decline of 1.3%. Meanwhile, the Zacks Consumer Staples sector has declined 0.6%.
Buyouts Strengthen Portfolio
Mondelez's growth path has been propelled through a series of acquisitions. The acquisition of Ricolino (concluded in the third quarter of 2023) is projected to double the size of MDLZ’s Mexican operations, while the Clif Bar buyout (August 2022) has further strengthened the company’s market presence. Contributions from the Ricolino and Clif Bar buyouts boosted net revenues in the second quarter of 2023.
The integration of Chipita S.A. and Grenade (in 2022) showcases Mondelez's commitment to enhancing its product offerings. The acquisition spree, further underscored by Gourmet Food Holdings and Hu Master Holdings, has diversified Mondelez's portfolio and augmented its distribution capabilities.
Image Source: Zacks Investment Research
Emphasizing Core Competencies
Mondelez's emphasis on its core product categories, specifically chocolates and biscuits, has been a key catalyst. The shift in consumer preferences toward snacking rather than traditional meals has provided the company with a favorable opportunity to progress in these enduring categories. Both product categories recorded impressive double-digit growth in the second quarter of 2023. Management anticipates maintaining robust volume momentum in these categories as it progresses through 2023.
Battling Cost Hurdles
Mondelez's growth story has been somewhat deterred by cost inflation. In the second quarter of 2023, the adjusted gross profit margin contracted 50 basis points (bps) to 37.5% due to increased raw material and transportation costs.
Also, the adjusted operating income margin was partly hurt by inflated input costs. In its second-quarter 2023 earnings release, Mondelez stated that it still expects a double-digit increase in inflation stemming from the continued elevated cost of packaging, ingredients and labor.
Wrapping Up
Mondelez has been reaping the rewards of its proactive pricing strategies aimed at countering these challenges. The favorable outcomes of these initiatives were evident in the organic net revenue growth achieved in the second quarter of 2023. During the quarter, the top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Mondelez's strategic expansion initiatives, combined with its dedication to core snacking categories and cost-control measures, place the company in a strong position for consistent growth amid a dynamic environment. Management expects 2023 organic net revenue growth of more than 12%. It anticipates adjusted earnings per share (EPS) growth on a constant-currency basis of more than 12%.
Solid Consumer Staple Bets
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). IPAR has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Flowers Foods (FLO - Free Report) , a packaged bakery food product company, currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6% on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2. HELE’s expected EPS growth rate for three to five years is 8%.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.
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Mondelez (MDLZ) Is Marching Ahead of the Industry: Here's Why
Mondelez International, Inc. (MDLZ - Free Report) has shown resilience by leveraging its solid expansion, even amid inflated cost challenges. Strategic buyouts, efficient pricing and a focus on the core chocolate and biscuit categories have helped this Zacks Rank #3 (Hold) company drive growth.
This snack food and beverage product company has outperformed the industry as well as the Zacks Consumer Staples sector in the past six months. Shares of MDLZ have increased 9% against the industry’s decline of 1.3%. Meanwhile, the Zacks Consumer Staples sector has declined 0.6%.
Buyouts Strengthen Portfolio
Mondelez's growth path has been propelled through a series of acquisitions. The acquisition of Ricolino (concluded in the third quarter of 2023) is projected to double the size of MDLZ’s Mexican operations, while the Clif Bar buyout (August 2022) has further strengthened the company’s market presence. Contributions from the Ricolino and Clif Bar buyouts boosted net revenues in the second quarter of 2023.
The integration of Chipita S.A. and Grenade (in 2022) showcases Mondelez's commitment to enhancing its product offerings. The acquisition spree, further underscored by Gourmet Food Holdings and Hu Master Holdings, has diversified Mondelez's portfolio and augmented its distribution capabilities.
Image Source: Zacks Investment Research
Emphasizing Core Competencies
Mondelez's emphasis on its core product categories, specifically chocolates and biscuits, has been a key catalyst. The shift in consumer preferences toward snacking rather than traditional meals has provided the company with a favorable opportunity to progress in these enduring categories. Both product categories recorded impressive double-digit growth in the second quarter of 2023. Management anticipates maintaining robust volume momentum in these categories as it progresses through 2023.
Battling Cost Hurdles
Mondelez's growth story has been somewhat deterred by cost inflation. In the second quarter of 2023, the adjusted gross profit margin contracted 50 basis points (bps) to 37.5% due to increased raw material and transportation costs.
Also, the adjusted operating income margin was partly hurt by inflated input costs. In its second-quarter 2023 earnings release, Mondelez stated that it still expects a double-digit increase in inflation stemming from the continued elevated cost of packaging, ingredients and labor.
Wrapping Up
Mondelez has been reaping the rewards of its proactive pricing strategies aimed at countering these challenges. The favorable outcomes of these initiatives were evident in the organic net revenue growth achieved in the second quarter of 2023. During the quarter, the top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Mondelez's strategic expansion initiatives, combined with its dedication to core snacking categories and cost-control measures, place the company in a strong position for consistent growth amid a dynamic environment. Management expects 2023 organic net revenue growth of more than 12%. It anticipates adjusted earnings per share (EPS) growth on a constant-currency basis of more than 12%.
Solid Consumer Staple Bets
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). IPAR has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Flowers Foods (FLO - Free Report) , a packaged bakery food product company, currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6% on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2. HELE’s expected EPS growth rate for three to five years is 8%.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.