MDLZ Stock Study (1-12-26)

Posted by Mark on June 2, 2025 at 06:51 | Last modified: January 12, 2026 09:32

I recently studied Mondelez International Inc. (MDLZ, $55.09).

M* writes:

     > Mondelez has operated independently since its split from the former
     > Kraft Foods North American grocery business in October 2012. The
     > firm is a leading player in the global snack enclave with a presence
     > in the biscuit (49% of sales as of the end of fiscal 2024),
     > chocolate (31%), gum/candy (11%), beverage (3%), and cheese and
     > grocery (6%) aisles. Mondelez’s portfolio includes well-known brands
     > like Oreo, Chips Ahoy, Halls, and Cadbury. The firm derives around
     > one-third of its revenue from developing markets, more than
     > one-third from Europe, and the remainder from North America.

Since 2016, this large-size company has grown sales and EPS at annualized rates of 4.9% and 11.4%, respectively (2015 will be excluded for the full analysis due to a one-time ~$7 billion pre-tax gain related to merger of its coffee business; adjusted ’15 EPS of $1.75/share shows 2016 to be a gain rather than substantial GAAP loss). Lines are mostly up, somewhat straight, and parallel except for sales dips in ’17 and ’19 and EPS dips in ’20, ’22, and ’24 [historical shares outstanding consistently decrease]. Five- (10-) year EPS R^2 is 0.27 (0.62) and Value Line (VL) gives an Earnings Predictability score of 75.

I give visual inspection a marginal pass. I’ve seen much worse and MDLZ has no negative annual numbers. Lackluster historical sales, though, preclude a high-quality growth stock. I do believe the SSG is relevant and potentially useful especially given the 75 mentioned above.

Turning to mangement metrics, peer (pink) and industry (blue) lines on the BI website are identical and parallel to the black MDLZ line. Only HSY shows up under “change peers” and pink line does not change even when I add NSRGY/GIS (suggested “competitors” from M* report) and click “Update Study.” I will therefore forego comparison and focus just on MDLZ.

Since 2016, PTPM increases from 5.6% to 17.2% (’24) with a last-5-year mean of 14.3%. ROE also increases from 5.8% to 16.2% (’24) with a last-5-year mean of 14.3%. Debt-to-Capital increases from 35.5% to 40.6% (’24) with a last-5-year mean of 42.5%.

Quick Ratio is 0.31 and Interest Coverage 7.5 per M* who assigns “Wide” Economic Moat, “Standard” rating for Capital Allocation, and gives a B grade for Financial Health (per BI website). VL rates the company B++ for Financial Strength and reports Interest Coverage near 12.

With regard to sales growth:

• YF gives YOY ACE 5.2% and 4.0% for ’25 and ’26, respectively (based on 23 analysts).
• Zacks gives YOY ACE 5.3% and 4.3% for ’25 and ’26, respectively (8 analysts).
• VL projects 3.7% annualized growth from ’24-’29.
• CFRA projects 4.5% YOY and 3.9% per year for ’25 and ’24-’26, respectively.
• M* gives 2-year ACE of 4.4%/year and projects annualized growth of 7.0% x10 years in analyst report.

My 3.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 3.1% contraction and 1.1% growth per year for ’24-’26 and ’24-’27 (based on 28 analysts).
• Nasdaq.com reports ACE growth 8.3% and 7.8%/year for ’25-’27 and ’25-’28 [10 / 6 / 1 analyst(s) for ’25 / ’27 / ’28].
• Seeking Alpha projects 4-year annualized growth of 1.9%.
• Finviz gives ACE 5-year annualized growth of 0.9% (3).
• Argus projects 5-year annualized growth of 9.0%.
• LSEG estimates LTG at 1.3%.
• YF gives YOY ACE 13.8% contraction and 8.7% growth for ’25 and ’26, respectively (24).
• Zacks gives YOY ACE 13.7% contraction and 8.3% growth for ’25 and ’26 (10).
• VL projects 6.3% annualized growth from ’24-’29.
• CFRA projects contraction of 15.2% YOY and 3.5% per year for ’25 and ’24-’26 along with 3-year CAGR of +1.0%.
• M* gives long-term annualized growth ACE of 3.5% and projects 4.8% in Equity Report.

My 1.0% forecast is near bottom of the long-term estimate range (mean of seven: 3.3%). Initial value is ’24 EPS of $3.42/share rather than 2025 Q3 EPS of $2.67 (TTM).

My Forecast High P/E is 20.0. Since 2016, high P/E falls from 44.2 to 22.6 (’24) with a last-5-year mean of 25.2 and a last-5-year-mean average P/E of 22.2. I am below the range.

My Forecast Low P/E is 14.0. Since 2016, low P/E falls from 34.2 to 17.2 (’24) with a last-5-year mean of 19.2. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) is $39.00. Default based on initial value given above ($47.90) seems too high at 13.1% less than previous close and 6.4% less than 52-week low. My arbitrary selection is 29.2% (23.8%) less, respectively.

Since 2016, Payout Ratio (PR) ranges from 41.1% in ’19 to 75.0% in ’22 with a last-5-year mean of 52.9%. I am forecasting below the range at 41.0%.

These inputs land MDLZ in the HOLD zone with a U/D ratio of 1.0. Total Annualized Return (TAR) is 7.5%.

PAR (using Forecast Average—not High—P/E) of 4.5% is less than I seek for a large size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 15 studies in the past 90 days (my study and 8 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 4.4%, 4.0%, 22.2, 18.5, and 52.4% respectively. I am lower across the board although MS sample size is too small for anything but anecdotal comparison. VL (M*) projects a future average annual P/E of 21.5 (12.7) that is greater (almost nonsensical; I need to email M* to ask how this is derived) than MS (20.4) and greater than mine (17.0).

MS high / low EPS are $3.74 / $2.67 versus my $3.59 / $3.42 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $4.65 ($4.33) soars above both.

MS LSPF of $49.30 is consistent with the Forecast Low P/E of 18.5 mentioned above. MS LSPF is 26.4% greater than mine resulting in more aggressive zoning, however.

MOS is robust in the study because my inputs are near or below historical/analyst averages/ranges. Also suggestive of this assessment is MS TAR exceeding mine by 2.0% per year and a much higher LSPF.

With regard to valuation, PEG is 0.77 and 20.4 per M* and my projected P/E (tiny growth rate), respectively: wildly inconsistent. Relative Value [(current P/E) / 5-year-mean average P/E] is fair at 0.93. M* has the stock undervalued by 25% while CFRA has it overvalued by 4%.

Per U/D, MDLZ is a BUY under $47/share. BI TAR criterion would be met [71.8 / ((12.77 / 100 ) +1 ) ^ 5] ~ $39.30 given a forecast high price ~$72.

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