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Mondelez (MDLZ) Looks Well-Placed: Focus on Snacking a Driver
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Mondelez International, Inc. (MDLZ - Free Report) appears in a solid position. The company has been benefiting from its focus on expanding the snacking category. To this end, Mondelez’s prudent acquisitions and innovation have been working well. Also, strength in emerging markets has been a driver for this Zacks Rank #2 (Buy) company.
These upsides drove the company’s fourth-quarter 2022 results, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Results gained from the resilience of the company’s snacking products, brand strength, broad-based growth across regions, categories and brands, continued strength in emerging and developed markets and gains from its recent acquisitions.
Driven by solid quarterly results and continued momentum in the snacks business, management issued upbeat guidance for 2023. For 2023, it expects organic net revenues of 5-7%.
The company envisions a high-single-digit increase in adjusted earnings per share or EPS at cc. The Zacks Consensus Estimate for 2023 EPS has risen from $3.12 to $3.17 over the past 30 days. Let’s take a closer look at the key drivers of this snack food and beverage product company.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez’s core chocolate and biscuit categories remain sustainable in both developed and emerging markets. As consumers prefer snacking over traditional meals, the company’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. Consumers in developed countries consider chocolates and biscuits as affordable indulgences and one of the most-valued snacking products.
Both these categories registered double-digit growth in the fourth quarter. Management is focused on expanding these categories as these have considerable scope for growth (in terms of penetration and per capita consumption). Mondelez intends to generate around 90% of its revenues through these two core categories in the long run.
Mondelez has undertaken several acquisitions to strengthen its snacking portfolio. In its third-quarter 2022 earnings release, the company noted that it closed the Ricolino buyout, which is expected to double the size of its Mexico business. In August 2022, it closed the buyout of Clif Bar.
Further, Mondelez acquired the Chipita S.A. business in January 2022, which is a major producer of sweet and salty snacks in Central and Eastern Europe. Contributions from the Ricolino, Clif Bar and Chipita buyouts boosted net revenues in the fourth quarter of 2022. Management expects to gain from the Ricolino and Clif Bar buyouts in 2023.
Mondelez is committed to increasing its focus on areas with higher growth potential. In the fourth quarter, the company announced the sale of its developed market gum business to Perfetti Van Melle. This move will help fund its recent buyouts and streamline its portfolio. Also, it intends to sell the Halls business in the near future.
Moreover, MDLZ remains encouraged about the underlying emerging market strength. In the fourth quarter of 2022, revenues from emerging markets increased 23.3% to $3,320 million while rising 24.7% on an organic basis.
The company is particularly witnessing strength in China and India. The company saw notable strength in Brazil, China, India, Russia, Mexico, the Western Andean countries and Southeast Asia.
We believe that these upsides are likely to aid growth for Mondelez, which has risen 1% in the past three months against the industry’s decline of 2.4%.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and EPS suggests an increase of 19.6% and 90.4%, respectively, from the year-ago reported number.
Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1. POST has a trailing four-quarter earnings surprise of 34.8%, on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 115.5% from the year-ago reported number.
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Mondelez (MDLZ) Looks Well-Placed: Focus on Snacking a Driver
Mondelez International, Inc. (MDLZ - Free Report) appears in a solid position. The company has been benefiting from its focus on expanding the snacking category. To this end, Mondelez’s prudent acquisitions and innovation have been working well. Also, strength in emerging markets has been a driver for this Zacks Rank #2 (Buy) company.
These upsides drove the company’s fourth-quarter 2022 results, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Results gained from the resilience of the company’s snacking products, brand strength, broad-based growth across regions, categories and brands, continued strength in emerging and developed markets and gains from its recent acquisitions.
Driven by solid quarterly results and continued momentum in the snacks business, management issued upbeat guidance for 2023. For 2023, it expects organic net revenues of 5-7%.
The company envisions a high-single-digit increase in adjusted earnings per share or EPS at cc. The Zacks Consensus Estimate for 2023 EPS has risen from $3.12 to $3.17 over the past 30 days. Let’s take a closer look at the key drivers of this snack food and beverage product company.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
All That’s Working Well for Mondelez
Mondelez’s core chocolate and biscuit categories remain sustainable in both developed and emerging markets. As consumers prefer snacking over traditional meals, the company’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. Consumers in developed countries consider chocolates and biscuits as affordable indulgences and one of the most-valued snacking products.
Both these categories registered double-digit growth in the fourth quarter. Management is focused on expanding these categories as these have considerable scope for growth (in terms of penetration and per capita consumption). Mondelez intends to generate around 90% of its revenues through these two core categories in the long run.
Mondelez has undertaken several acquisitions to strengthen its snacking portfolio. In its third-quarter 2022 earnings release, the company noted that it closed the Ricolino buyout, which is expected to double the size of its Mexico business. In August 2022, it closed the buyout of Clif Bar.
Further, Mondelez acquired the Chipita S.A. business in January 2022, which is a major producer of sweet and salty snacks in Central and Eastern Europe. Contributions from the Ricolino, Clif Bar and Chipita buyouts boosted net revenues in the fourth quarter of 2022. Management expects to gain from the Ricolino and Clif Bar buyouts in 2023.
Mondelez is committed to increasing its focus on areas with higher growth potential. In the fourth quarter, the company announced the sale of its developed market gum business to Perfetti Van Melle. This move will help fund its recent buyouts and streamline its portfolio. Also, it intends to sell the Halls business in the near future.
Moreover, MDLZ remains encouraged about the underlying emerging market strength. In the fourth quarter of 2022, revenues from emerging markets increased 23.3% to $3,320 million while rising 24.7% on an organic basis.
The company is particularly witnessing strength in China and India. The company saw notable strength in Brazil, China, India, Russia, Mexico, the Western Andean countries and Southeast Asia.
We believe that these upsides are likely to aid growth for Mondelez, which has risen 1% in the past three months against the industry’s decline of 2.4%.
Other Food Stocks Worth a Look
Some other top-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Post Holdings (POST - Free Report) .
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and EPS suggests an increase of 19.6% and 90.4%, respectively, from the year-ago reported number.
Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1. POST has a trailing four-quarter earnings surprise of 34.8%, on average.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 115.5% from the year-ago reported number.