Is Mondelez on Track for Success Despite Near-Term Challenges?

Mondelez International, Inc. MDLZ, a global leader in the snacking industry, has consistently demonstrated its ability to adapt and thrive, even amid difficult market dynamics. Known for its iconic brands like Cadbury Dairy Milk, Milka and Oreo, the company’s strategic focus on core categories such as chocolates, biscuits and baked snacks has solidified its position in the market. While Mondelez boasts numerous growth drivers, it also faces challenges, including rising input costs and geopolitical headwinds.Factors Enriching MDLZ’s FlavorMondelez continues to showcase exceptional performance in its core categories of chocolate and biscuits, reflecting its resilience and consumer appeal even in challenging economic conditions. The company’s revenue growth management strategies, including tailored pack sizes and diverse price points, have been instrumental in maintaining consumer loyalty and driving market share gains.In the third quarter of 2024, the chocolate category grew by 9.2%, with robust contributions from key markets in both developed and emerging regions. Iconic brands such as Cadbury Dairy Milk, Milka, Toblerone and Freia Marabou demonstrated strong momentum, capitalizing on their solid consumer loyalty and broad market reach. The biscuits and baked snacks category reported 3.3% growth, driven by a balanced mix of pricing and volume/mix improvements.As consumers prefer snacking over traditional meals, the company’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. As Mondelez continues to invest in innovation, marketing and distribution, the durability of these core categories positions the company well for sustained growth, particularly as these products align with consumer preferences for high-quality, accessible snacks. The company is on track to generate around 90% of its revenues through these categories by 2030.Mondelez has been keen on reshaping its portfolio through prudent acquisitions and divestitures. In September 2024, the company inked a deal to acquire a majority stake in Evirth, a popular manufacturer of cakes and pastries in China. This collaboration presents an exciting opportunity for Mondelez to leverage its iconic brands and distribution channels to create premium products in the rapidly growing cakes and pastries market. Other acquisitions like Clif Bar and Chipita have also helped strengthen Mondelez’s portfolio.MDLZ Price Performance vs. IndustryImage Source: Zacks Investment ResearchChallenges on MDLZ’s WayMondelez faces significant input cost headwinds due to elevated cocoa prices, which are projected to peak in the fourth quarter of 2024 and remain high into early 2025. Despite cost-management efforts, the company acknowledged that the chocolate segment’s profitability will fall short of historical levels, particularly in the first half of 2025. Such sustained cost pressures may strain margins.While emerging markets reported 4.9% organic revenue growth, this was accompanied by a 1% decline in volume/mix, largely driven by consumer boycotts of Western brands in certain EMEA regions and volume weakness in Mexico. Declining volumes in key markets could reflect diminishing pricing power or eroding consumer loyalty, particularly if elasticities worsen under further pricing actions. Mondelez’s vast global presence exposes it to the risk of volatile foreign currency movements. Currency movements are likely to adversely impact net revenues by nearly 1.5% and adjusted EPS by around 11 cents in 2024.Shares of MDLZ have tumbled 16.1% in the past three months compared with the industry’s decline of 7.7%.What to Expect From MDLZ?Continuous reinvestments in its brands and capabilities — along with impressive portfolio reshaping efforts — place Mondelez well for future growth.  By focusing on core categories such as chocolates, biscuits and baked snacks, enhancing brand appeal, prioritizing operational efficiency and cost management and empowering team members, Mondelez is poised to deliver strong performance for years to come. Management expects 2024 organic net revenue growth in the upper range of 3-5%. Mondelez envisions high-single-digit adjusted earnings per share (EPS) growth on a constant-currency basis.While Mondelez faces near-term pressures, its resilience, brand strength and adaptability make it a company to watch. MDLZ currently carries a Zacks Rank #3 (Hold).Some Solid BetsWe have highlighted three better-ranked stocks, namely United Natural Foods, Inc. UNFI, Ingredion Incorporated INGR and Freshpet FRPT.United Natural currently sports a Zacks Rank of 1 (Strong Buy). UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for United Natural’s current financial-year sales and earnings suggests growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure.Ingredion Incorporated manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently carries a Zacks Rank #2 (Buy).INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.4% from the year-ago reported number.Freshpet, a pet food company, presently carries a Zacks Rank #2. FRPT has a trailing four-quarter earnings surprise of 144.5%, on average.The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings suggests growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Freshpet, Inc. (FRPT): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Ingredion Incorporated (INGR): Free Stock Analysis Report Mondelez International, Inc. (MDLZ): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks