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Mondelez (MDLZ) Ups View on Q3 Earnings Beat: Organic Sales Aid
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Mondelez International, Inc. (MDLZ - Free Report) delivered robust third-quarter 2023 results, as the top and bottom lines increased year over year and came ahead of the respective Zacks Consensus Estimate. A strong year-to-date performance encouraged management to raise its 2023 organic net revenue and bottom-line guidance. Shares of Mondelez increased 2.5% in the after-market trading session on Nov 1.
Robust results reflect the strength of the company’s categories, brands and geographies. MDLZ witnessed solid revenue and profit growth across all regions due to a robust volume/mix. Continuous reinvestments in its brands and capabilities (such as digital), along with impressive revenue growth management and portfolio reshaping efforts, place Mondelez well for future growth.
Quarter in Detail
Adjusted earnings were 82 cents per share, increasing 16.7% on a constant-currency (cc) basis. The metric surpassed the Zacks Consensus Estimate of 78 cents per share. The year-over-year upside was mainly backed by solid operating gains, reduced shares outstanding and lower interest expenses. These were somewhat offset by increased taxes, decreased benefit plan non-service income and reduced equity method investment net earnings.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Net revenues advanced 16.3% year over year to $9,029 million. The metric beat the Zacks Consensus Estimate of $8,678 million. The uptick was driven by strong organic net revenue growth of 15.7% and increased sales from Clif Bar and Ricolino buyouts, somewhat negated by currency headwinds.
Favorable pricing (up 11.9 percentage points or pp) and volumes (up 3.8 pp) contributed to organic net revenues. Our model suggested pricing and volume increases of 8.9% and 6.6% for the third quarter.
Revenues from emerging markets increased 14% to $3,527 million while rising 19% on an organic basis. Revenues from developed markets moved up 17.8% to $5,502 million while increasing 13.4% on an organic basis. We had expected a year-over-year net revenue increase from emerging markets and developed markets of 9.7% and 13.5%, respectively.
Region-wise, revenues in Latin America, Asia, the Middle East & Africa, Europe and North America increased 42.9%, 5.1%, 16.5% and 14% year over year, respectively. On an organic basis, revenues increased 35.1%, 11.9%, 15.4% and 11.4% in the abovementioned regions, respectively.
The adjusted gross profit increased by $648 million at cc. The adjusted gross profit margin expanded 120 (basis points) bps to 38.6% due to pricing, an improved product mix and reduced manufacturing expenses, partly negated by escalated raw material and transportation costs.
Mondelez’s adjusted operating income rose by $307 million at cc. The adjusted operating income margin expanded 60 bps to 16.7% on increased net pricing, SG&A leverage, a favorable product mix and reduced manufacturing costs stemming from productivity. These were somewhat offset by input cost inflation. Our model suggested the adjusted operating income margin to remain in line with the year-ago period at 16.1%.
Other Financials
The company ended the quarter with cash and cash equivalents of $1,610 million, long-term debt of $16,411 million and total equity of $28,560 million. MDLZ provided $3,150 million of net cash from operating activities for the nine months ended Sep 30, 2023. Adjusted free cash flow was $2,370 million for the same period. Management expects a free cash flow of more than $3.3 billion for 2023.
The company returned $0.6 billion to shareholders in cash dividends and share repurchases during the reported quarter.
Guidance
Mondelez now expects 2023 organic net revenue growth of 14-15% compared with the growth of more than 12% projected earlier. The raised outlook takes into account the impressive year-to-date performance.
Management anticipates adjusted earnings per share (EPS) growth on a cc basis of more than 16%, up from more than 12% growth forecast before. Currency movements are likely to affect net revenues by nearly 4% and adjusted EPS by 15 cents in 2023.
Shares of this Zacks Rank #4 (Sell) company have dropped 10.8% in the past three months compared with the industry’s decline of 14.6%.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
TreeHouse Foods (THS - Free Report) , a private-label food and beverage company, currently sports a Zacks Rank #1. THS has a trailing four-quarter earnings surprise of 31.4%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ current fiscal-year earnings suggests growth of almost 112% from the corresponding year-ago reported figure.
Celsius Holdings (CELH - Free Report) , a functional drink and liquid supplement company, currently carries a Zacks Rank #2 (Buy). CELH delivered a positive earnings surprise in the preceding three quarters.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales suggests growth of 89.9% from the corresponding year-ago reported figure.
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Mondelez (MDLZ) Ups View on Q3 Earnings Beat: Organic Sales Aid
Mondelez International, Inc. (MDLZ - Free Report) delivered robust third-quarter 2023 results, as the top and bottom lines increased year over year and came ahead of the respective Zacks Consensus Estimate. A strong year-to-date performance encouraged management to raise its 2023 organic net revenue and bottom-line guidance. Shares of Mondelez increased 2.5% in the after-market trading session on Nov 1.
Robust results reflect the strength of the company’s categories, brands and geographies. MDLZ witnessed solid revenue and profit growth across all regions due to a robust volume/mix. Continuous reinvestments in its brands and capabilities (such as digital), along with impressive revenue growth management and portfolio reshaping efforts, place Mondelez well for future growth.
Quarter in Detail
Adjusted earnings were 82 cents per share, increasing 16.7% on a constant-currency (cc) basis. The metric surpassed the Zacks Consensus Estimate of 78 cents per share. The year-over-year upside was mainly backed by solid operating gains, reduced shares outstanding and lower interest expenses. These were somewhat offset by increased taxes, decreased benefit plan non-service income and reduced equity method investment net earnings.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
Net revenues advanced 16.3% year over year to $9,029 million. The metric beat the Zacks Consensus Estimate of $8,678 million. The uptick was driven by strong organic net revenue growth of 15.7% and increased sales from Clif Bar and Ricolino buyouts, somewhat negated by currency headwinds.
Favorable pricing (up 11.9 percentage points or pp) and volumes (up 3.8 pp) contributed to organic net revenues. Our model suggested pricing and volume increases of 8.9% and 6.6% for the third quarter.
Revenues from emerging markets increased 14% to $3,527 million while rising 19% on an organic basis. Revenues from developed markets moved up 17.8% to $5,502 million while increasing 13.4% on an organic basis. We had expected a year-over-year net revenue increase from emerging markets and developed markets of 9.7% and 13.5%, respectively.
Region-wise, revenues in Latin America, Asia, the Middle East & Africa, Europe and North America increased 42.9%, 5.1%, 16.5% and 14% year over year, respectively. On an organic basis, revenues increased 35.1%, 11.9%, 15.4% and 11.4% in the abovementioned regions, respectively.
The adjusted gross profit increased by $648 million at cc. The adjusted gross profit margin expanded 120 (basis points) bps to 38.6% due to pricing, an improved product mix and reduced manufacturing expenses, partly negated by escalated raw material and transportation costs.
Mondelez’s adjusted operating income rose by $307 million at cc. The adjusted operating income margin expanded 60 bps to 16.7% on increased net pricing, SG&A leverage, a favorable product mix and reduced manufacturing costs stemming from productivity. These were somewhat offset by input cost inflation. Our model suggested the adjusted operating income margin to remain in line with the year-ago period at 16.1%.
Other Financials
The company ended the quarter with cash and cash equivalents of $1,610 million, long-term debt of $16,411 million and total equity of $28,560 million. MDLZ provided $3,150 million of net cash from operating activities for the nine months ended Sep 30, 2023. Adjusted free cash flow was $2,370 million for the same period. Management expects a free cash flow of more than $3.3 billion for 2023.
The company returned $0.6 billion to shareholders in cash dividends and share repurchases during the reported quarter.
Guidance
Mondelez now expects 2023 organic net revenue growth of 14-15% compared with the growth of more than 12% projected earlier. The raised outlook takes into account the impressive year-to-date performance.
Management anticipates adjusted earnings per share (EPS) growth on a cc basis of more than 16%, up from more than 12% growth forecast before. Currency movements are likely to affect net revenues by nearly 4% and adjusted EPS by 15 cents in 2023.
Shares of this Zacks Rank #4 (Sell) company have dropped 10.8% in the past three months compared with the industry’s decline of 14.6%.
3 Solid Consumer Staple Picks
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). LW delivered an earnings surprise of 46.2% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
TreeHouse Foods (THS - Free Report) , a private-label food and beverage company, currently sports a Zacks Rank #1. THS has a trailing four-quarter earnings surprise of 31.4%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ current fiscal-year earnings suggests growth of almost 112% from the corresponding year-ago reported figure.
Celsius Holdings (CELH - Free Report) , a functional drink and liquid supplement company, currently carries a Zacks Rank #2 (Buy). CELH delivered a positive earnings surprise in the preceding three quarters.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales suggests growth of 89.9% from the corresponding year-ago reported figure.