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Here's Why Mondelez (MDLZ) Appears to be a Delectable Pick
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Mondelez International, Inc. (MDLZ - Free Report) is in great shape due to the strength of its core categories. The company has been undertaking regular innovation and efforts to reshape its portfolio to focus on growth areas. Apart from this, the Zacks Rank #2 (Buy) player has been benefiting from favorable pricing, which has been working well for its organic revenues.
Management expects 2024 organic net revenue growth in the upper range of 3-5%. The company anticipates seeing higher pricing in various markets with notable chocolate portfolios like Europe. Mondelez envisions high-single-digit adjusted earnings per share (EPS) growth on a cc basis in 2024.
The Zacks Consensus Estimate for 2024 EPS has gone up by a penny to $3.52 over the past 60 days. The consensus mark suggests growth of 10.3% from the figure reported in the year-ago period.
Focus on Core Categories & More
Mondelez has been expanding its snacking category in particular. 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.
The company’s core chocolate and biscuit categories remain sustainable in both developed and emerging markets. Both these categories registered double-digit growth during the full year 2023, including an 11.9% surge in biscuits and a 14.5% increase in chocolates. In the fourth quarter, the biscuit and chocolate categories registered sales growth of 5.5% and 11.2%, respectively. Management is focused on expanding its chocolate, biscuit and baked snacks categories as they present opportunities for solid growth and profitability. The company is on track to generate around 90% of its revenues through these categories in the long run.
Image Source: Zacks Investment Research
Continuous reinvestments in its brands and capabilities, along with impressive portfolio reshaping efforts, place Mondelez well for future growth. In the third quarter of 2022, the company closed the Ricolino buyout, which is expected to strengthen its presence in the Mexican candy and chocolate segments. In August 2022, it closed the buyout of Clif Bar.
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. Prior to this, Mondelez’s buyouts of Grenade, Gourmet Food Holdings and Hu Master Holdings, all in 2021, underscore its concentration on expanding scale and distribution capabilities in core categories.
On the flip side, Mondelez announced the sale of its developed market gum business to Perfetti Van Melle in the fourth quarter of 2022. This goes in tandem with the company’s actions to streamline its portfolio and focus its resources on growth areas.
Mondelez remains encouraged by the underlying emerging market strength. In the fourth quarter of 2023, revenues from emerging markets increased 7.8% to $3,580 million while rising 14.9% on an organic basis. The upside can be attributed to gains from countries like Brazil, China, India, Mexico and the Western Andean.
Wrapping Up
By focusing on core categories, such as chocolate, biscuits and baked snacks, enhancing brand appeal, prioritizing operational efficiency and cost management and empowering team members, Mondelez is poised to deliver strong performance for years to come. MDLZ is also making investments aimed at empowering consumers to make careful snacking decisions that align with their health-conscious and active lifestyles.
Shares of the company have risen 6.6% in the past six months compared with the industry’s growth of 13.3%
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks and currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 17.5% from the year-ago reported numbers.
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Here's Why Mondelez (MDLZ) Appears to be a Delectable Pick
Mondelez International, Inc. (MDLZ - Free Report) is in great shape due to the strength of its core categories. The company has been undertaking regular innovation and efforts to reshape its portfolio to focus on growth areas. Apart from this, the Zacks Rank #2 (Buy) player has been benefiting from favorable pricing, which has been working well for its organic revenues.
Management expects 2024 organic net revenue growth in the upper range of 3-5%. The company anticipates seeing higher pricing in various markets with notable chocolate portfolios like Europe. Mondelez envisions high-single-digit adjusted earnings per share (EPS) growth on a cc basis in 2024.
The Zacks Consensus Estimate for 2024 EPS has gone up by a penny to $3.52 over the past 60 days. The consensus mark suggests growth of 10.3% from the figure reported in the year-ago period.
Focus on Core Categories & More
Mondelez has been expanding its snacking category in particular. 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.
The company’s core chocolate and biscuit categories remain sustainable in both developed and emerging markets. Both these categories registered double-digit growth during the full year 2023, including an 11.9% surge in biscuits and a 14.5% increase in chocolates. In the fourth quarter, the biscuit and chocolate categories registered sales growth of 5.5% and 11.2%, respectively. Management is focused on expanding its chocolate, biscuit and baked snacks categories as they present opportunities for solid growth and profitability. The company is on track to generate around 90% of its revenues through these categories in the long run.
Image Source: Zacks Investment Research
Continuous reinvestments in its brands and capabilities, along with impressive portfolio reshaping efforts, place Mondelez well for future growth. In the third quarter of 2022, the company closed the Ricolino buyout, which is expected to strengthen its presence in the Mexican candy and chocolate segments. In August 2022, it closed the buyout of Clif Bar.
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. Prior to this, Mondelez’s buyouts of Grenade, Gourmet Food Holdings and Hu Master Holdings, all in 2021, underscore its concentration on expanding scale and distribution capabilities in core categories.
On the flip side, Mondelez announced the sale of its developed market gum business to Perfetti Van Melle in the fourth quarter of 2022. This goes in tandem with the company’s actions to streamline its portfolio and focus its resources on growth areas.
Mondelez remains encouraged by the underlying emerging market strength. In the fourth quarter of 2023, revenues from emerging markets increased 7.8% to $3,580 million while rising 14.9% on an organic basis. The upside can be attributed to gains from countries like Brazil, China, India, Mexico and the Western Andean.
Wrapping Up
By focusing on core categories, such as chocolate, biscuits and baked snacks, enhancing brand appeal, prioritizing operational efficiency and cost management and empowering team members, Mondelez is poised to deliver strong performance for years to come. MDLZ is also making investments aimed at empowering consumers to make careful snacking decisions that align with their health-conscious and active lifestyles.
Shares of the company have risen 6.6% in the past six months compared with the industry’s growth of 13.3%
3 Other Solid Picks
The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2. CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks and currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 17.5% from the year-ago reported numbers.