Why Has Mondelez International Stock Underperformed The S&P Since 2018?

MDLZ: Mondelez logo
MDLZ
Mondelez

Mondelez International Inc. (NASDAQ: MDLZ) stock price rose around 1.65x from $40 in 2018 end to $66 currently, primarily due to favorable changes in its P/S multiple. During this period, the company also witnessed a slight rise in revenues, and a drop in the outstanding share count, which also supported the company’s stock price. However, over the same period, the S&P 500 has returned almost 70%, meaning that Mondelez stock underperformed the S&P.

In our interactive dashboard, Why Mondelez Stock Moved: MDLZ Stock Has Gained 65% Since 2018, we break down the factors behind this move.

(A) MDLZ’s Total Revenue has grown 14% from $25.9 billion in 2018 to $29.5 billion on an LTM basis

  • MDLZ’s total revenue has seen a slow rise over the past few years, increasing from $25.9 billion in FY ’18 to $29.5 billion on an LTM basis.
  • Mondelez is an American multinational confectionery, food, holding and beverage and snack food company, whose revenues have steadily risen over the past few years.
  • Out of the company’s product segments, biscuit sales made up 37%, and chocolates made up 32% as of FY ’21, with gum & candy, beverages and cheese & grocery making up the remaining 31% collectively.
  • For additional details about Mondelez revenues and comparison to peers, see Mondelez International Inc. (MDLZ) Revenue Comparison
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(B) Revenue per share (RPS) increased 22% from $17.59 in 2018 to $21.39 currently

  • Mondelez revenue rose from $25.9 billion in 2018 to $29.5 billion currently, while the outstanding share count decreased from 1.5 billion in 2018 to 1.4 billion currently.
  • Due to this, RPS has risen from $17.59 in FY ’18 to $21.39 currently.

(C) Price-To-Sales (P/S) multiple for Mondelez rose steadily from 2.1x in 2018 to 3.2x by 2021 end, but has pulled back marginally to 3.1x currently, still almost 50% higher than its 2018 level

  • Despite Mondelez’s slow sales growth between 2018-end to 2021, its P/S multiple rose strongly from 2.1x in 2018 to as high as 3.2x in late-2021, on the back of rising investor expectations surrounding a demand revival post Covid.
  • However, due to the current increased uncertainty in the broader markets, the P/S multiple has pulled back marginally, currently standing at around 3.1x.
  • For additional details about the company stock returns and comparison to peers, see Mondelez (MDLZ) Stock Return Comparison.

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Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MDLZ Return 4% -2% 47%
 S&P 500 Return -10% -14% 82%
 Trefis Multi-Strategy Portfolio -8% -15% 234%

[1] Month-to-date and year-to-date as of 4/29/2022
[2] Cumulative total returns since the end of 2016

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