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One of the leading manufacturers of packaged food-products, Mondelez International Inc. (MDLZ - Analyst Report) prepares to release its fourth-quarter 2012 results on Wednesday, Feb 13. Let’s see now, how things are shaping up for Mondelez prior to the announcement of its fourth quarter results.

Factors to Consider this Past Quarter

Last quarter was Mondelez’s first quarterly results after being spun off from the old Kraft Foods. On Oct 1, Kraft Foods spun off its North American grocery business into a separate independent company, Kraft Foods Group Inc. (KRFT - Analyst Report).  The old Kraft Foods was renamed to Mondelez.

In the last quarter, Mondelez’s earnings missed the Zacks Consensus Estimate by 5.1% and also declined 2.6% from the prior-year quarter hurt by weak top line, higher taxes and currency headwinds. Revenues from both Developing Markets and Europe fell sharply in the quarter. Softening gum demand and lower marketing support for biscuits hurt sales in Brazil, while market share losses in chocolates and biscuits crippled growth in Russia.

Mondelez which markets popular snacks brands like Cadbury, Jacobs, LU, Milka, Nabisco, Oreo, Tang and Trident is still in a transitional stage and we believe it will take some to stabilize.

Earnings Whispers

Our proven model does not conclusively shows that Mondelez is likely to beat the Zacks Consensus Estimate in the upcoming quarter. To beat the estimate, a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3. However, this is not the case here due to the following reasons:

Negative Zacks ESP: The company’s Most Accurate estimate stands at 33 cents, while the Zacks Consensus is pegged quite higher at 37 cents. This results in an Earnings ESP of -10.81%.

Zacks Rank #3 (Hold): Mondelez’s Zacks Rank #3 lowers the predictive power of ESP. Mondelez International’s Zacks Rank #3 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.

Management expects its top line growth for the developing market to be below its target in the fourth quarter. For 2013 as well, Mondelez expects its overall net organic top-line to grow at the lower end of its long-term target marred by lower pricing and the challenging economic conditions.  

Other Stocks to Consider

Here are some other stocks from the consumer staples industry, which you may want to consider on the basis of our model as they have the right combination of elements to post an earnings beat this quarter:

The Hershey Co (HSY - Analyst Report) has Earnings ESP of +0.96% and Zacks Rank #2 (Buy).

Flowers Foods Inc. (FLO - Snapshot Report) has Earnings ESP of +5.56% and Zacks Rank #1 (Strong Buy).
 

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