What the latest earnings mean for Mondelez International (MDLZ)
Mondelez International (MDLZ) recently reported quarterly results in which revenue topped analyst expectations, but higher cocoa costs weighed on profitability, and the stock has slipped since, reflecting investor focus on margin pressure.
See our latest analysis for Mondelez International.
At a share price of $57.58, Mondelez shows a 7.33% year to date share price return, while the 1 year total shareholder return of a 12.0% decline suggests momentum has cooled despite more recent short term gains.
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So with Mondelez delivering revenue ahead of expectations but feeling the squeeze from cocoa costs, and the share price lagging its 5 year total return, is this a reset that offers upside, or is the market already pricing in future growth?
Most Popular Narrative: 14.2% Undervalued
At a last close of $57.58 versus a narrative fair value of $67.13, the most followed view sees Mondelez trading at a meaningful discount, with that gap built on specific assumptions about revenue, margins, and future earnings power.
Mondelez International is executing a robust pricing strategy in response to high cocoa costs, which is expected to improve revenue as pricing takes effect globally, especially in markets like Europe and emerging markets.
Curious what kind of revenue path, margin lift, and earnings multiple need to come together to justify that higher value? The full narrative spells it out in detail.
Result: Fair Value of $67.13 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, there is still the risk that elevated cocoa costs and softer consumer demand in key markets, especially North America, could pressure margins and challenge this positive outlook.
Find out about the key risks to this Mondelez International narrative.
Another Angle On Mondelez’s Value
That 14.2% narrative discount suggests upside, but the current P/E of 30.1x tells a tighter story. It sits well above the US Food industry at 20.5x and even above a 27.6x fair ratio, which hints at less margin for error if the growth narrative stumbles.
To see how this P/E gap could close in either direction, have a look at the See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
The mix of concern around costs and optimism on revenue leaves sentiment finely balanced. Move quickly, review the numbers yourself, and weigh the 2 key rewards and 3 important warning signs
Ready to hunt for your next idea?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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