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Mondelez (MDLZ) Thrives on Buyouts, Snacking Category Strength
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Mondelez International, Inc. (MDLZ - Free Report) has been capitalizing on its expansion endeavors, primarily through strategic acquisitions and efficient pricing strategies. The company's concerted focus on the chocolate and biscuit categories has yielded significant gains.
Despite facing cost challenges, Mondelez has demonstrated resilience, with its shares up 11.3% over the past six months, outpacing the industry's growth of 0.6%. The company raised its guidance for 2023 when it reported robust second-quarter results, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
A Look at Q2 & Beyond
Second-quarter results gained from broad-based strength in the company’s business, with solid profitable top-line growth across all regions and categories. Continuous reinvestments in its brands and capabilities along with effective pricing actions, cost discipline and a solid volume/mix fueled performance. Adjusted earnings were 76 cents per share, increasing 16.9% year over year and 21.5% on a constant-currency (cc) basis.
Net revenues advanced 17% year over year to $8,507 million. The metric beat the Zacks Consensus Estimate of $8,194.2 million. The uptick was driven by strong organic net revenue growth of 15.8% and increased sales from the Clif Bar and Ricolino buyouts. Favorable pricing contributed to organic net revenues.
Mondelez expects 2023 organic net revenue growth of more than 12% compared with the growth of more than 10% projected earlier. Management anticipates adjusted earnings per share (EPS) growth on a cc basis of more than 12%. The company had earlier expected the metric to grow more than 10%.
Image Source: Zacks Investment Research
Boosting Growth Through Acquisitions
Mondelez's growth trajectory has been propelled by 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.
Concentrating on Core Strengths
Mondelez's strategic focus on core categories, particularly chocolates and biscuits, has proven to be a prudent move. Shifting consumer preferences toward snacking over traditional meals has helped Mondelez capitalize on these enduring categories.
The resilience of chocolates and biscuits, regarded as affordable indulgences and beloved snacking choices, remains evident in both developed and emerging markets. Both these categories registered double-digit growth in the second quarter. Management expects solid volume momentum for both these categories as it moves forward in 2023.
Navigating Cost Challenges, Ensuring Growth
Mondelez's growth narrative has not been all that smooth, with cost inflation emerging as a significant hurdle. 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.
However, the Zacks Rank #3 (Hold) company's proactive pricing strategies to combat these challenges have been proving beneficial. The positive impact of these efforts was reflected in organic net revenue growth in the second quarter of 2023. Mondelez’s strategic expansion, coupled with its steadfast focus on core snacking categories and effective cost management, positions the company for sustained growth amid a dynamic landscape.
Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year earnings suggests growth of 141.1% from the year-ago reported figure.
The J.M. Smucker, which provides pasture-raised products, currently carries a Zacks Rank #2 (Buy). SJM has a trailing four-quarter earnings surprise of 14%, on average.
The Zacks Consensus Estimate for The J.M. Smucker’s current fiscal-year earnings suggests growth of 6.7% from the year-ago period reported number.
Ingredion Incorporated, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for INGR’s current fiscal-year earnings per share has increased from $9.10 to $9.23 over the past seven days.
The consensus mark for Ingredion Incorporated’s current fiscal-year earnings suggests growth of 23.9% from the year-ago reported numbers.
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Mondelez (MDLZ) Thrives on Buyouts, Snacking Category Strength
Mondelez International, Inc. (MDLZ - Free Report) has been capitalizing on its expansion endeavors, primarily through strategic acquisitions and efficient pricing strategies. The company's concerted focus on the chocolate and biscuit categories has yielded significant gains.
Despite facing cost challenges, Mondelez has demonstrated resilience, with its shares up 11.3% over the past six months, outpacing the industry's growth of 0.6%. The company raised its guidance for 2023 when it reported robust second-quarter results, wherein the top and bottom lines increased year over year and beat the Zacks Consensus Estimate.
A Look at Q2 & Beyond
Second-quarter results gained from broad-based strength in the company’s business, with solid profitable top-line growth across all regions and categories. Continuous reinvestments in its brands and capabilities along with effective pricing actions, cost discipline and a solid volume/mix fueled performance. Adjusted earnings were 76 cents per share, increasing 16.9% year over year and 21.5% on a constant-currency (cc) basis.
Net revenues advanced 17% year over year to $8,507 million. The metric beat the Zacks Consensus Estimate of $8,194.2 million. The uptick was driven by strong organic net revenue growth of 15.8% and increased sales from the Clif Bar and Ricolino buyouts. Favorable pricing contributed to organic net revenues.
Mondelez expects 2023 organic net revenue growth of more than 12% compared with the growth of more than 10% projected earlier. Management anticipates adjusted earnings per share (EPS) growth on a cc basis of more than 12%. The company had earlier expected the metric to grow more than 10%.
Image Source: Zacks Investment Research
Boosting Growth Through Acquisitions
Mondelez's growth trajectory has been propelled by 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.
Concentrating on Core Strengths
Mondelez's strategic focus on core categories, particularly chocolates and biscuits, has proven to be a prudent move. Shifting consumer preferences toward snacking over traditional meals has helped Mondelez capitalize on these enduring categories.
The resilience of chocolates and biscuits, regarded as affordable indulgences and beloved snacking choices, remains evident in both developed and emerging markets. Both these categories registered double-digit growth in the second quarter. Management expects solid volume momentum for both these categories as it moves forward in 2023.
Navigating Cost Challenges, Ensuring Growth
Mondelez's growth narrative has not been all that smooth, with cost inflation emerging as a significant hurdle. 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.
However, the Zacks Rank #3 (Hold) company's proactive pricing strategies to combat these challenges have been proving beneficial. The positive impact of these efforts was reflected in organic net revenue growth in the second quarter of 2023. Mondelez’s strategic expansion, coupled with its steadfast focus on core snacking categories and effective cost management, positions the company for sustained growth amid a dynamic landscape.
3 Appetizing Treats
Some better-ranked consumer staple stocks are Post Holdings (POST - Free Report) , The J.M. Smucker (SJM - Free Report) and Ingredion Incorporated (INGR - Free Report) .
Post Holdings, a consumer-packaged goods holding company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 59.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year earnings suggests growth of 141.1% from the year-ago reported figure.
The J.M. Smucker, which provides pasture-raised products, currently carries a Zacks Rank #2 (Buy). SJM has a trailing four-quarter earnings surprise of 14%, on average.
The Zacks Consensus Estimate for The J.M. Smucker’s current fiscal-year earnings suggests growth of 6.7% from the year-ago period reported number.
Ingredion Incorporated, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for INGR’s current fiscal-year earnings per share has increased from $9.10 to $9.23 over the past seven days.
The consensus mark for Ingredion Incorporated’s current fiscal-year earnings suggests growth of 23.9% from the year-ago reported numbers.