Mondelez International Faces Challenges Amid Slow Stock Performance
Chicago-based Mondelez International, Inc. (MDLZ) reigns as a major player in the snack and food industry with a market cap of $92.2 billion. The company boasts a wide range of popular brands in categories such as biscuits, chocolate, gum, candy, and powdered beverages, focusing on innovation to meet consumer demands globally.
Stock Struggles Compared to Market Gains
Over the past year, MDLZ has struggled in the stock market, showing a decline of 2.7% while the S&P 500 Index ($SPX) has surged by nearly 35.8%. So far in 2024, MDLZ is down 8.4%, starkly contrasting with SPX’s remarkable 24.2% increase.
The company also underperformed against the First Trust Nasdaq Food & Beverage ETF (FTXG), which has gained 4.9% over the last year, compared with MDLZ’s losses.
Challenges in Adapting to the Market
Mondelez International has faced difficulties in keeping up with shifting consumer preferences and increased competition in the snack food industry, contributing to its recent underperformance.
Q3 Earnings Show Mixed Results
On October 29, Mondelez reported its Q3 earnings, revealing a net revenue increase of 1.9%, driven by 5.4% organic growth. This was despite challenges like a recent divestiture in its gum business and currency fluctuations.
While gross profit and operating income fell due to adverse derivative impacts and costs related to ERP systems, adjusted margins improved thanks to better pricing and productivity measures. The company reaffirmed its expectations for 2024, estimating high single-digit EPS growth and over $3.5 billion in free cash flow. Following the earnings announcement, the stock experienced a slight uptick.
Positive Outlook from Analysts
For the fiscal year concluding in December, analysts project Mondelez’s EPS to grow by 9.4% to $3.49 on a diluted basis, noting that the company has consistently beat consensus estimates for the past four quarters.
Among 22 analysts covering MDLZ, the consensus rating stands as a “Strong Buy,” which includes 20 “Strong Buy” ratings, one “Moderate Buy,” and one “Hold.” However, this rating reflects a less optimistic outlook compared to three months ago, when 19 analysts had it as a “Strong Buy.”
On November 6, analyst Peter Galbo from Bank of America Securities maintained a “Buy” rating for Mondelez. The average price target is set at $81.14, indicating a potential upside of 22.3% from current levels, while the highest target of $92 suggests even more significant growth potential of 38.6%.
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On the date of publication, Rashmi Kumari did not hold any positions in the securities mentioned in this article. All information and data provided are for informational purposes. For further details, please refer to the Barchart Disclosure Policy here.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
