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Mondelez (MDLZ) Lined Up for Q1 Earnings: Key Things to Note

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Mondelez International, Inc. (MDLZ - Free Report) is likely to witness year-over-year growth in the top line, when it reports first-quarter 2021 numbers on Apr 27. The Zacks Consensus Estimate for revenues is pegged at $7,037 million, which suggests growth of 4.9% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the bottom line has declined a cent in the past seven days to 69 cents per share, which is in line with the year-ago quarter’s reported figure. Notably, this manufacturer, marketer and seller of snack food and beverage products has a trailing four-quarter earnings surprise of 4.7%, on average.

Key Factors to Note

Mondelez has been benefiting from its strong product portfolio, courtesy of its constant innovation and gains from buyouts. Incidentally, in January 2021, the company acquired Hu Master Holdings, the parent company of Hu Products, which offers growth opportunities in chocolate and cross-category potential in crackers for Mondelez. Moreover, the deal provides Mondelez important opportunities to grow a distribution network that includes e-commerce as well as premium conventional retail channels. Also, the company acquired a majority interest in Give & Go (in April 2020), which is a pioneer in fully-finished sweet baked goods.

Further, the company has been undertaking brand-building efforts. To this end, Mondelez has been increasing investments in in-store execution and advertising to support the Power Brands and innovation, funded by cost savings. Such investments are helping the company witness growth in key brands. In fact, management in its fourth-quarter 2020 earnings call highlighted that it is on track with making increased investments in working media and e-commerce capabilities.

That being said, Mondelez is facing weakness in some emerging markets for a while now. During the fourth quarter of 2020, Mondelez’s revenues from emerging markets declined 2.5% to $2,474 million. Although management is generally witnessing a rebound in emerging markets, various economic challenges and headwinds related to increased Gum & Candy exposure in a small group of markets is a concern. Apart from these, escalated raw-material costs and high COVID-19 expenses were a drag on the company’s gross margin in the last reported quarter.

Nonetheless, efficient pricing and efforts to enhance savings bode well. Management is on track with its saving initiatives, such as zero-based budgeting. It is also on track with eliminating other unnecessary costs from the supply chain. During its fourth-quarter 2020 earnings call, management highlighted that it is focusing on simplifying operations by reducing the number of low-turn SKUs from the portfolio. In fact, the company expects to keep working in this area in 2021.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Mondelez this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Mondelez currently has a Zacks Rank #4 (Sell) and an Earnings ESP of +0.65%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Medifast (MED - Free Report) has an Earnings ESP of +6.25% and a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #3, at present.

Archer Daniels Midland Company (ADM - Free Report) currently has an Earnings ESP of +2.84% and a Zacks Rank #3.

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