Mondelez's Sugary Valuation Could Cause Wealth Decay
Stephen Simpson, CFA • 14 Comments
Stephen Simpson, CFA • 14 Comments
Yesterday, 8:19 AM
- Organic revenue was up 1.5% for Mondelez International (NASDAQ:MDLZ) in Q2. On a reported basis, revenue was down 17.7% during the quarter, led by a 27% fall in Europe and 32% decline in Latin America.
- Gross profit margin rate -10 bps to 39.9%. Operating income margin rate -90 bps to 10.1%.
- The company says it used pricing in some markets to offset higher input costs. A move to "zero-based budgeting" also helped to pad the bottom line.
- Mondelez sees full-year organic revenue growth of ~2% and EPS of $0.03 to $0.05. Looking ahead, the launch of Milka chocolate in China and e-commerce investments are expected to pay off.
- Previously: Mondelēz beats by $0.04, misses on revenue (July 27)
- MDLZ -1.13% premarket to $44.74.
Yesterday, 8:03 AM
Mon, Jul. 25, 8:54 AM
- Mondelez International (NASDAQ:MDLZ) is higher in early trading with a clearer path ahead of the company in its pursuit of Hershey.
- Susquehanna upgrades shares to Positive off the new developments.
- Analyst Pablo Zuanic estimates cost and top line synergies would create 25-30% upside for Mondelez if a deal is finalized. Even if the deal falls through, Zuanic reasons that Mondelez could be a target itself in the rapidly consolidating food sector.
- Previously: Hershey Trust settling with state attorney general over governance (July 22)
- MDLZ +1.11% premarket to $45.63.
Thu, Jun. 30, 2:31 PM
- Hershey (NYSE:HSY) says it has rejected the takeover bid from Mondelez (NASDAQ:MDLZ), with a unanimous vote.
- The company said it got a nonbinding indication of interest for a cash-and-stock deal totaling $107/share of Hershey common stock, along with nonmonetary considerations.
- Hershey says it carefully reviewed the indication of interest, the board uninamously rejected it, and that it determined it provided "no basis for further discussion between Mondelez and the company."
- Shares of Hershey still halted. MDLZ is up 4.2%.
- Updated 2:37 p.m.: Hershey has resumed trading, down slightly from its all-time high of $117.79 set earlier but still up 13.5% on the day.
- Previously: Hershey rises 19% on report of blockbuster buyout offer from Mondelez (Jun. 30 2016)
- Previously: Hershey jumps 7.6% on report of takeout bid by Mondelez (Jun. 30 2016)
Thu, Jun. 30, 10:54 AM
- Hershey (NYSE:HSY) is now up 19.4% after reports of a buyout offer by food giant Mondelez (MDLZ +1.8%).
- Terms of a deal aren't known, but Hershey is worth $21B and Mondelez nearly $70B, and the combination would unite a well-known American candy brand with the maker of Cadbury chocolates.
- Any deal depends on the approval of the Hershey Trust (holders of 81% of its votes), which has opposed selling in the past.
- Mondelez is trying to make a compelling case, though, promising to relocate its chocolate HQ to Hershey, Pa., and rename itself Hershey.
- Updated 12:29 p.m.: Hershey shares halted again for news.
Thu, Jun. 30, 10:36 AM
- Mondelez (NASDAQ:MDLZ), the food giant that had been carved out of Kraft Foods, has made a takeover bid for Hershey (NYSE:HSY), The Wall Street Journal reports.
- Hershey shares are up 7.6% in response.
- MDLZ is up 1.4% today.
- Updated 10:39 a.m.: Coming off a halt, Hershey is now up 17.5% to $114.09.
- Updated 10:45 a.m.: Hershey halted again, up 21.3%.
- Developing story ...
Mon, Jun. 27, 6:23 PM
- A lawsuit filed by options and future traders charging Kraft Heinz (KHC -0.1%) and Mondelez (MDLZ -2.1%) with price rigging will be allowed to proceed following a federal judge's ruling.
- The traders say the food giants illegally manipulated the price of wheat at their expense. At issue is a large late 2011 purchase of wheat futures that the plaintiffs say violates Sherman antitrust law and the Commodity Exchange Act.
- That charge moves forward, though a related claim that the two companies ran "wash trades" for a decade to hide manipulation was dismissed (and can be brought again).
- The case is similar to allegations raised by the Commodity Futures Trading Commission, which had previously noted Kraft Foods bought $90M in wheat futures in December 2011 to take a dominant position in the market without ever intending to take possession of the wheat.
Fri, Jun. 24, 11:05 AM
- Among consumer stocks covered by Susquehanna, the analysts say Mondelez (MDLZ -4.3%) and Coca-Cola European Partners (CCE -5.4%), along with Sodastream (SODA -2.7%), have the greatest earnings downside from a euro and pound that have gotten, well, pounded.
- The euro is currently down 2.3% against the dollar, while the pound is down 8.5%.
- "For those seeking to buy the dip, we would prefer MDLZ over CCE," the firm says, noting that 100% of CCE's revenues are exposed to those two currencies, it faces structural risks, and Coca-Cola's 48% ownership of CCE makes it an unlikely acquisition target.
- Acquisitive companies with U.S. dollar assets could go hunting in Europe, the analysts say, pointing to likely suitor Kraft Heinz (KHC -1.8%) -- a top pick for the firm, along with TreeHouse Foods (THS -0.6%) and Molson Coors (TAP -3.3%).
- Meanwhile, the possible ascendance of UKIP leader Nigel Farage in the UK or "anything that makes a Donald Trump presidency more likely" is bad for Mexico-heavy Constellation Brands (STZ -1.2%).
Wed, Apr. 27, 8:15 AM
- Mondelez International (NASDAQ:MDLZ) announces that organic revenue rose 2.1% in Q1. The gain consisted of a 2.8 percentage point impact from pricing to help offset the 70 bp volume/mix drag. Sales were down 17% on a reported basis on significant F/X pressure..
- Organic revenue was higher across all regions, led by a 4.5% increase in the Eastern Europe, Middle East & Africa business. Emerging markets reported organic revenue growth of 3.6%, while developed markets was also positive with a 1.3% gain. Power Brands delivered a 3.8% increase in organic revenue.
- Adjusted operating income margin rate +240 bps to 15.1%.
- "We significantly expanded margins by continuing to reduce supply chain and overhead costs," noted CEO Irene Rosenfeld.
- Previously: Mondelēz beats by $0.09, beats on revenue (April 27)
- MDLZ +2.56% premarket to $43.59.
Wed, Feb. 3, 11:27 AM
- Susquehanna dug down into Mondelez International's (MDLZ -7.2%) guidance in a fresh note to investors.
- The investment firm notes Mondelez's organic growth estimate of +2% is below its estimate of 4%, even with the F/X impact in-line with expectations.
- EBIT margin of 15% to 16% looks "disappointing" to analyst Pablo Zuniac.
- A 2018 target of operating income margin of 17% to 18% looks a tad "ambitious" to Susquehanna.
- Previously: Mondelēz misses by $0.02, beats on revenue (Feb. 03 2016)
- Previously: Mondelēz down post Q4 results (Feb. 03 2016)
Wed, Feb. 3, 9:09 AM
- Mondelēz (NASDAQ:MDLZ) reports organic net revenue growth of 4.7% in Q4.
- Power brands organic net revenue grew 5.5%.
- Organic net revenue from emerging markets +12.4% and developed markets +0.1%.
- Revenue break-up: Latin America: $1.258B (+1.5%, Organic net revenue: +23.8%); Asia Pacific: $1.082B (-5.5%, Organic net revenue: +1.2%); Eastern Europe,Middle East& Africa: $636M (-29.2%, Organic net revenue: +5.4%); Europe: $2.565B (-31.8%, Organic net revenue: -1.1%); North America: $1.823B (+2.1%, Organic net revenue: +2.6%).
- Adjusted gross profit margin rate improved 280 bps to 38.8%.
- Adjusted operating margin rate grew 120 bps to 13.9%.
- FY2016 Guidance: Organic net revenue: At least 2%; Adjusted operating income margin rate: 15% to 16%; Adjusted EPS: double-digit growth on a constant currency basis.
- MDLZ -4.39% premarket.
Oct. 28, 2015, 8:06 AM
- Mondelēz (NASDAQ:MDLZ): Q3 EPS of $0.42 beats by $0.01.
- Revenue of $6.85B (-17.9% Y/Y) beats by $40M.
- Shares +3.9% PM.
Oct. 23, 2015, 9:58 AM
- M&A talk in the food sector could set off a chain reaction, according to analysts.
- Kellogg's (K +0.2%) interest in Diamond Foods (DMND +6.6%) and a play by Treehouse Foods (THS +3.1%) for Ralcorp are in advanced stages, but other companies which could be drawn into talks include Boulder Brands (BDBD +0.5%), Amplify Snack Brands (BETR +1.7%), Mondelez International (MDLZ -0.1%), Campbell Soup (CPB +0.1%) and Hain Celestial Group (HAIN +0.4%).
- Private-label brands in particular may look appetizing to larger food companies.
- Previously: Reuters: TreeHouse in talks to buy Ralcorp from ConAgra (Oct. 22 2015)
- Previously: NY Post: Kellogg close to Diamond Foods buyout (Oct. 23 2015)
- Related ETF: PBJ
Sep. 16, 2015, 11:01 AM
- A statement from Anheuser-Busch InBev (BUD +5%) indicates the company must make a formal offer for SABMiller (OTCPK:SBMRY +19.5%) before October 14 or take a pass on the mega-merger to stay in compliance with U.K. law.
- There's a ripple effect with beer stocks circling the globe that includes distributors such as Compania Cervecerias Unidas (CCU +3.1%), Fomento Economico Mexicano (FMX +1.8%), AmBev (ABEV +2.1%).
- Another intriguing aspect of a potential A-B takeover of SABMiller is the side effects on the food industry if 3G Capital is fully engaged on the deal. 3G is a major player in food mergers and a factor in how investors value companies such as Mondelez International (MDLZ +0.2%), PepsiCo (PEP +0.4%), TreeHouse Foods (THS +0.1%), Campbell Soup (CPB +1.9%), JM Smucker (SJM +1.1%), and other food names.
- A-B InBev statement (.pdf)
- Previously: AB InBev prepping offer for SABMiller
- Previously: Beer stock rally with M&A on tap
Aug. 14, 2015, 1:44 PM
- Nestle (OTCPK:NSRGY, OTCPK:NSRGF) or General Mills (GIS +0.5%) could make a run at Mondelez International (MDLZ +0.9%) with Berkshire Hathaway and 3G effectively taking themselves out of the bidding process for a few years due to the Kraft-Heinz merger, speculates The Deal.
- A buyer of Mondelez will have to be heavy hitter due to the company's estimated enterprise value of +$90B. PepsiCo (PEP +0.3%) fits the bill and has Nelson Peltz backing the play, but has a board and CEO seemingly uninterested.
Aug. 6, 2015, 9:15 AM
Mondelez International, Inc. is engaged in the manufacturing and marketing of snack food and beverage products, which include biscuits such as cookies, crackers and salted snacks, chocolate, gum & candy, coffee & powdered beverages and various cheese & grocery products. It operates its business... More
Sector: Consumer Goods
Industry: Food - Major Diversified
Country: United States
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