What You May Have Missed About Mondelez International (MDLZ)

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.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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