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Shares of Mondelez International, Inc. (MDLZ - Free Report) grew more than 3% after the trading session on Nov 1, following the impressive third-quarter 2022 numbers. The top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Results gained from the resilience of its snacking products, brand strength, broad-based revenue growth across both emerging and developed markets, pricing actions, and robust volume growth. As a result, management raised its 2022 view.
However, the company continues to witness elevated input cost inflation, particularly in energy, transportation, packaging, wheat, dairy and edible oils. In order to mitigate this, the company has already implemented price increases across key markets, including Europe. MDLZ also revealed plans to implement another round of price increases across the globe, including the United States, which is likely to be effective from December 2022.
The company noted that it concluded the deal to acquire Clif Bar, which boasts a robust snack bar business worth more than 1 billion. Also, it closed the Ricolino buyout, which is expected to double the size of its Mexico business. MDLZ announced incremental investment into the Cocoa Life program and expanded its target to source all our cocoa volume from Cocoa Life by 2030. Mondelez remains on track with the full integration of its Chipita business.
Mondelez International, Inc. Price, Consensus and EPS Surprise
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
This Zacks Rank #3 (Hold) 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. MDLZ 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.
Guidance
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.
Image Source: Zacks Investment Research
Shares of MDLZ have declined 4.3% in the past three months against the industry’s growth of 0.4%.
Coca-Cola FEMSA currently flaunts a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 26%, on average. It has a long-term earnings growth rate of 10.3%.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings per share suggests growth of 15% and 6.2%, respectively, from the year-ago reported numbers. The consensus mark for KOF’s earnings per share has moved up 9.8% in the past seven days.
Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales suggests growth of 3.5% from the year-ago reported numbers, whereas the same for earnings suggests a decline of 5.1%. The consensus mark for STZ’s earnings per share has moved down 5.7% in the past 30 days.
Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 51.2% from the prior-year reported number, whereas the same for earnings suggests a decline of 73.9%. The consensus mark for BROS’ earnings per share has moved down 25% in the past 30 days.
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Mondelez (MDLZ) Rises on Q3 Earnings & Sales Beat, View Hike
Shares of Mondelez International, Inc. (MDLZ - Free Report) grew more than 3% after the trading session on Nov 1, following the impressive third-quarter 2022 numbers. The top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
Results gained from the resilience of its snacking products, brand strength, broad-based revenue growth across both emerging and developed markets, pricing actions, and robust volume growth. As a result, management raised its 2022 view.
However, the company continues to witness elevated input cost inflation, particularly in energy, transportation, packaging, wheat, dairy and edible oils. In order to mitigate this, the company has already implemented price increases across key markets, including Europe. MDLZ also revealed plans to implement another round of price increases across the globe, including the United States, which is likely to be effective from December 2022.
The company noted that it concluded the deal to acquire Clif Bar, which boasts a robust snack bar business worth more than 1 billion. Also, it closed the Ricolino buyout, which is expected to double the size of its Mexico business. MDLZ announced incremental investment into the Cocoa Life program and expanded its target to source all our cocoa volume from Cocoa Life by 2030. Mondelez remains on track with the full integration of its Chipita business.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
Quarter in Detail
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
This Zacks Rank #3 (Hold) 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. MDLZ 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.
Guidance
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.
Image Source: Zacks Investment Research
Shares of MDLZ have declined 4.3% in the past three months against the industry’s growth of 0.4%.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , Constellation Brands (STZ - Free Report) and Dutch Bros (BROS - Free Report) .
Coca-Cola FEMSA currently flaunts a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 26%, on average. It has a long-term earnings growth rate of 10.3%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings per share suggests growth of 15% and 6.2%, respectively, from the year-ago reported numbers. The consensus mark for KOF’s earnings per share has moved up 9.8% in the past seven days.
Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales suggests growth of 3.5% from the year-ago reported numbers, whereas the same for earnings suggests a decline of 5.1%. The consensus mark for STZ’s earnings per share has moved down 5.7% in the past 30 days.
Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 51.2% from the prior-year reported number, whereas the same for earnings suggests a decline of 73.9%. The consensus mark for BROS’ earnings per share has moved down 25% in the past 30 days.