We've been asking ourselves recently if the market has placed a fair valuation on Mondelez International. Let's dive into some of the fundamental values of this large-cap Consumer Staples company to determine if there might be an opportunity here for value-minded investors.
Mondelez International's Valuation Is in Line With Its Sector Averages:
Mondelez International, Inc., through its subsidiaries, manufactures, markets, and sells snack food and beverage products in the Latin America, North America, Asia, the Middle East, Africa, and Europe. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 21.21 and an average price to book (P/B) ratio of 4.12. In contrast, Mondelez International has a trailing 12 month P/E ratio of 20.9 and a P/B ratio of 3.32.
Mondelez International's PEG ratio is 2.39, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $25,938 | $25,868 | $26,581 | $28,720 | $31,496 | $35,397 |
| Revenue Growth | n/a | -0.27% | 2.76% | 8.05% | 9.67% | 12.39% |
| Operating Margins | 13% | 15% | 14% | 16% | 11% | 16% |
| Net Margins | 13% | 15% | 13% | 15% | 9% | 13% |
| Net Income (MM) | $3,331 | $3,944 | $3,569 | $4,314 | $2,726 | $4,602 |
| Net Interest Expense (MM) | $462 | $484 | -$608 | -$447 | -$423 | -$344 |
| Depreciation & Amort. (MM) | $811 | $1,047 | $1,116 | $1,113 | $1,107 | $1,190 |
| Earnings Per Share | $2.23 | $2.69 | $2.47 | $3.04 | $1.96 | $3.35 |
| EPS Growth | n/a | 20.63% | -8.18% | 23.08% | -35.53% | 70.92% |
| Diluted Shares (MM) | 1,486 | 1,458 | 1,441 | 1,413 | 1,385 | 1,333 |
| Free Cash Flow (MM) | $2,853 | $3,040 | $3,101 | $3,176 | $3,002 | $3,477 |
| Capital Expenditures (MM) | $1,095 | $925 | $863 | $965 | $906 | $1,065 |
| Current Ratio | 0.45 | 0.5 | 0.66 | 0.74 | 0.6 | 0.61 |
| Total Debt (MM) | $18,372 | $18,458 | $20,120 | $17,967 | $21,485 | $20,081 |
| Net Debt / EBITDA | 4.19 | 3.51 | 3.32 | 2.5 | 4.22 | 2.77 |
Mondelez International has growing revenues and a flat capital expenditure trend, decent operating margins with a stable trend, and positive EPS growth. However, the firm suffers from irregular cash flows and a highly leveraged balance sheet.
