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Mondelez Stock Up 10% in Three Months: What's Next for Investors?
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Mondelez International, Inc. (MDLZ - Free Report) leverages effective cost management and strategic pricing to drive growth while benefiting from strong momentum in emerging markets. The company focuses on core categories such as chocolate, biscuits and baked snacks, which have demonstrated resilience during economic downturns. The company is on track to generate around 90% of its revenues through these categories by 2030.
MDLZ’s efforts to reshape its portfolio and forge partnerships, such as the recent alliance with Lotus Bakeries, are designed to amplify growth opportunities. The company faces cost inflation due to rising cocoa prices. Nevertheless, it has been on track with pricing strategies to counter inflation.
Shares of MDLZ have rallied 10.1% in the past three months, outpacing the industry’s growth of 5.8%. The company’s upsides have also helped it surpass the Zacks Consumer Staples sector and the S&P 500’s respective increase of 6.1% and 2.4%.
Image Source: Zacks Investment Research
Focus on Core Categories Drives MDLZ
As consumers prefer snacking over traditional meals, Mondelez’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. This was, in fact, witnessed in second-quarter 2024, wherein its core categories of chocolate, biscuit and baked snacks showed strong loyalty and volume resilience even amid challenging market conditions.
Volume in seasonal chocolate was up 0.6% on a year-to-date basis, backed by the performance of seasonal shapes, novelties and bite-sized products. Snacking category consumers remain extremely loyal to the brands they love. The company’s core chocolate and biscuit categories remain sustainable in developed and emerging markets. In the second quarter, the Biscuits and Baked Snacks increased 0.8% and the chocolate category registered sales growth of 5.6%. Management has been focused on expanding its chocolate, biscuit and baked snacks categories as they present opportunities for solid growth and profitability.
Mondelez Continues to Boost Portfolio Strength
Mondelez has always been keen on reshaping its portfolio through prudent acquisitions and divestitures. Some of its recent acquisitions include Ricolino (concluded in the third quarter of 2022), Clif Bar (Aug. 2022) and Chipita S.A. business (January 2022). MDLZ’s recent strategic partnership with Lotus Bakeries to co-develop new chocolate products and expand into India is a significant move to scale its business in emerging markets. The company plans to launch its first co-branded products with Lotus Bakeries in Europe in early 2025. This alliance aligns with its long-term growth strategies in chocolate and biscuits.
Hurdles on MDLZ’s Path
Mondelez is encountering a challenging and dynamic operating environment in terms of rising input costs, inflation and consumer uncertainties in various regions. Some consumers in North America are focused on finding snacking options that fit within specific overall ticket sizes. In contrast, others prioritize convenience, opting for multipacks that offer better value and variety. However, this demand for different price points and pack sizes is addressed through Mondelez’s proven price pack architecture, which helps it to meet diverse consumer needs.
Mondelez has been battling cost inflation for a while now. Cocoa prices have spiked significantly, creating cost pressures in the chocolate segment. Although offset by pricing and lower manufacturing expenses, the company’s adjusted gross margin was partly affected by escalated raw material and transportation costs in the second quarter of 2024. The adjusted operating margin was also partially hurt by input cost inflation and increased advertising and consumer promotion costs. Mondelez expects high cocoa prices to serve as a significant headwind in the second half of 2024.
What Should Investors Do With MDLZ Stock?
Mondelez International is well-positioned for growth, driven by its strategic pricing initiatives, disciplined cost management and a focus on resilient core categories like chocolate and biscuits. The company's presence in emerging markets and ongoing portfolio expansion, including partnerships like the one with Lotus Bakeries, offer promising growth avenues. Persistent challenges such as rising cocoa prices and inflationary pressures could put pressure on margins in the near term, limiting upside potential. All said, current investors should hold their positions in the stock, while potential new investors might want to wait for a more favorable entry point. Mondelez currently carries a Zacks Rank #3 (Hold).
Solid Staple Stocks
Here, we have highlighted some better-ranked consumer staple stocks, namely The Chef's Warehouse (CHEF - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) .
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, currently sports a Zacks Rank #1. PPC delivered a positive earnings surprise of 27.3% in the trailing four quarters, on average.
The Zacks Consensus Estimated figure for Pilgrim’s Pride’s current financial-year earnings implies growth of 183.43%, respectively, from the prior-year reported level.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.
The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings calls for a rise of around 8.1% and 12.71%, respectively, from the year-earlier levels.
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Mondelez Stock Up 10% in Three Months: What's Next for Investors?
Mondelez International, Inc. (MDLZ - Free Report) leverages effective cost management and strategic pricing to drive growth while benefiting from strong momentum in emerging markets. The company focuses on core categories such as chocolate, biscuits and baked snacks, which have demonstrated resilience during economic downturns. The company is on track to generate around 90% of its revenues through these categories by 2030.
MDLZ’s efforts to reshape its portfolio and forge partnerships, such as the recent alliance with Lotus Bakeries, are designed to amplify growth opportunities. The company faces cost inflation due to rising cocoa prices. Nevertheless, it has been on track with pricing strategies to counter inflation.
Shares of MDLZ have rallied 10.1% in the past three months, outpacing the industry’s growth of 5.8%. The company’s upsides have also helped it surpass the Zacks Consumer Staples sector and the S&P 500’s respective increase of 6.1% and 2.4%.
Image Source: Zacks Investment Research
Focus on Core Categories Drives MDLZ
As consumers prefer snacking over traditional meals, Mondelez’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. This was, in fact, witnessed in second-quarter 2024, wherein its core categories of chocolate, biscuit and baked snacks showed strong loyalty and volume resilience even amid challenging market conditions.
Volume in seasonal chocolate was up 0.6% on a year-to-date basis, backed by the performance of seasonal shapes, novelties and bite-sized products. Snacking category consumers remain extremely loyal to the brands they love. The company’s core chocolate and biscuit categories remain sustainable in developed and emerging markets. In the second quarter, the Biscuits and Baked Snacks increased 0.8% and the chocolate category registered sales growth of 5.6%. Management has been focused on expanding its chocolate, biscuit and baked snacks categories as they present opportunities for solid growth and profitability.
Mondelez Continues to Boost Portfolio Strength
Mondelez has always been keen on reshaping its portfolio through prudent acquisitions and divestitures. Some of its recent acquisitions include Ricolino (concluded in the third quarter of 2022), Clif Bar (Aug. 2022) and Chipita S.A. business (January 2022). MDLZ’s recent strategic partnership with Lotus Bakeries to co-develop new chocolate products and expand into India is a significant move to scale its business in emerging markets. The company plans to launch its first co-branded products with Lotus Bakeries in Europe in early 2025. This alliance aligns with its long-term growth strategies in chocolate and biscuits.
Hurdles on MDLZ’s Path
Mondelez is encountering a challenging and dynamic operating environment in terms of rising input costs, inflation and consumer uncertainties in various regions. Some consumers in North America are focused on finding snacking options that fit within specific overall ticket sizes. In contrast, others prioritize convenience, opting for multipacks that offer better value and variety. However, this demand for different price points and pack sizes is addressed through Mondelez’s proven price pack architecture, which helps it to meet diverse consumer needs.
Mondelez has been battling cost inflation for a while now. Cocoa prices have spiked significantly, creating cost pressures in the chocolate segment. Although offset by pricing and lower manufacturing expenses, the company’s adjusted gross margin was partly affected by escalated raw material and transportation costs in the second quarter of 2024. The adjusted operating margin was also partially hurt by input cost inflation and increased advertising and consumer promotion costs. Mondelez expects high cocoa prices to serve as a significant headwind in the second half of 2024.
What Should Investors Do With MDLZ Stock?
Mondelez International is well-positioned for growth, driven by its strategic pricing initiatives, disciplined cost management and a focus on resilient core categories like chocolate and biscuits. The company's presence in emerging markets and ongoing portfolio expansion, including partnerships like the one with Lotus Bakeries, offer promising growth avenues. Persistent challenges such as rising cocoa prices and inflationary pressures could put pressure on margins in the near term, limiting upside potential. All said, current investors should hold their positions in the stock, while potential new investors might want to wait for a more favorable entry point. Mondelez currently carries a Zacks Rank #3 (Hold).
Solid Staple Stocks
Here, we have highlighted some better-ranked consumer staple stocks, namely The Chef's Warehouse (CHEF - Free Report) , Pilgrim’s Pride (PPC - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) .
The Chef’s Warehouse, which engages in the distribution of specialty food products, currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, currently sports a Zacks Rank #1. PPC delivered a positive earnings surprise of 27.3% in the trailing four quarters, on average.
The Zacks Consensus Estimated figure for Pilgrim’s Pride’s current financial-year earnings implies growth of 183.43%, respectively, from the prior-year reported level.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.
The Zacks Consensus Estimated figure for Ollie's Bargain’s current financial-year sales and earnings calls for a rise of around 8.1% and 12.71%, respectively, from the year-earlier levels.