Is The Market Pricing Mondelez Inc Fairly?

MDLZ: Mondelez logo
MDLZ
Mondelez

Mondelez International Inc (NASDAQ: MDLZ), is one of the world’s largest snacks companies. During the recent annual earnings the company’s revenue declined by 0.1 % for the full year, with sales for 2017 at $25.8 billion, impacted by divestiture and the malware incident.  At the same time, Mondelez delivered a strong year of margin expansion and earnings growth, marking significant progress from four years ago. This growth in margins was fueled by their Power Brands and favorable trends in emerging markets. The strength of these businesses is enabling the company to grow profitably despite the pressures of a persistently challenging retail environment.  For 2018 the management is focused on execution, ongoing improvements in top-line growth, and continuing actions to expand margins. The company is working on developing their long-term strategic plan for sustainable growth, by optimizing and accelerating their  strengths to create more value for their consumers, customers, communities, colleagues, and shareholders.

We anticipate the company to post progressive results in the future as the management remains focused on cost saving initiatives, and supply chain reorganization is also expected to support its margins. Our price estimate of $49 is dependent on a FY18 sales forecast of $26.6 bn, up 2.8% from $25.8 bn last fiscal. We also expect MDLZ’s net income margin to be ~14.6% from 11.3% in FY 2017.  We expect a Price-to-Earnings multiple of 19.2 and an average share count of 1.5 bn giving a share price estimate of $49, roughly 20% above its current market price.
 
Our revenue estimate of $26.6 bn for FY2018 is arrived at by projecting revenues for each individual geographical segment of the Company: Latin America; Asia, Middle East, and Africa; Europe; and North America, that represents total net sales, and following historical growth trends and the percentage contribution of each segment to total to the company’s top line.

The P/E multiple is also forecast taking into account the historical data and its likely trend. Detailed steps to arrive at our price estimate are outlined in our interactive dashboardYou can modify our assumptions to arrive at your own price estimate for the company.

 

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