- If you are wondering whether Mondelez International at around US$58.27 is a bargain or just fairly priced, you are not alone.
- The stock has had a mixed run, with a 3.7% gain over the past week, a 5.4% decline over the last 30 days, an 8.6% return year to date, and a 11.2% loss over the past year.
- Recent headlines have focused on Mondelez International as a global snacks player, with investors weighing brand strength, cost pressures, and consumer demand trends. That context has been important for how the market has reacted to the share price moves over different time frames.
- Simply Wall St currently gives Mondelez International a valuation score of 3 out of 6, and the sections that follow will compare different valuation approaches. The article will then finish with a broader way to think about what that score really means for you.
Find out why Mondelez International's -11.2% return over the last year is lagging behind its peers.
Approach 1: Mondelez International Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model looks at the cash Mondelez International is expected to generate in the future, then discounts those projected cash flows back to today to estimate what the business might be worth in dollars right now.
For Mondelez International, the latest twelve month free cash flow is around $3.2b. Analysts provide explicit estimates for several years, and Simply Wall St then extends those projections out to a ten year view using its 2 Stage Free Cash Flow to Equity model. By 2028, projected free cash flow is $4.7b, with further years based on extrapolated growth assumptions rather than additional analyst forecasts.
When all those future cash flows are discounted back and combined, the model arrives at an estimated intrinsic value of about $106.86 per share. Compared with the recent share price of roughly $58.27, the DCF output suggests the stock is around 45.5% undervalued on this measure.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Mondelez International is undervalued by 45.5%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.
Approach 2: Mondelez International Price vs Earnings
For profitable companies, the P/E ratio is a useful way to connect what you pay today with the earnings the business is currently generating. It also captures what the market is willing to pay for each dollar of earnings, which often reflects expectations for growth and the level of risk investors see in those earnings.
A higher growth outlook or lower perceived risk can support a higher P/E as a “normal” level. Slower expected growth or higher risk usually aligns with a lower, more conservative P/E. Mondelez International currently trades on a P/E of about 30.47x. That sits above the Food industry average P/E of roughly 19.86x, and below the peer group average of around 44.85x.
Simply Wall St’s Fair Ratio for Mondelez International is 27.64x. This Fair Ratio is a proprietary view of what the P/E might be given factors such as earnings growth, industry, profit margin, market cap and risks. It goes further than a simple comparison to peers or the broad industry, because it adjusts for company specific characteristics rather than assuming all businesses deserve the same multiple. Since the current P/E of 30.47x is higher than the Fair Ratio of 27.64x, the stock screens as overvalued on this metric.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Mondelez International Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, where you set out your own story for Mondelez International, link that story to specific revenue, earnings and margin assumptions, and arrive at a Fair Value that updates when news or earnings arrive. You can then compare that Fair Value to the latest price to decide whether the current market level feels attractive or not. For example, one investor might build a Narrative around cocoa cost normalization and improved margins that supports a Fair Value closer to the higher analyst target of US$75.00, while another might focus on softer demand, volume pressure and sector wide caution and land nearer the lower target of US$60.00.
Do you think there's more to the story for Mondelez International? Head over to our Community to see what others are saying!
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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