Mondelēz International: Much Sweeter Than You Think

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Global Value Finder
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Summary

  • Mondelez International has been an exceptional cash-generating machine with a leading global position in the food industry.
  • The company uses its high level of free cash flow to reward its shareholders and invest in its brands.
  • In contrast to common fears, Mondelez is not a typical U.S. centric company.
  • Following the recent market turmoil, shares are trading at their lowest valuation since the spinoff from Kraft back in 2012.

Mondelēz International (Mondelez International) (NASDAQ:MDLZ) is one the world's leading snack companies. The company owns a pantry of billion-dollar brands such as Cadbury and Milka chocolates, Trident gum and Oreo biscuits. The company has more than 150 manufacturing and processing facilities in more than 50 countries around the world.

I believe that Mondelez presents the best setup of growth versus value in the global food sector. Specifically, my high conviction investment thesis in Mondelez is based on three success pillars. The first pillar is revenue growth, accompanied by a significant rise in free cash flow. The second pillar is shareholder friendliness, or how Mondelez treats its shareholders well. The third pillar, as with every investment, is the current compelling valuation of shares following the recent market turmoil.

Lately, investors have been skeptical due to the recent broad selloff in food stocks. But that shouldn't scare savvy investors from investing in Mondelez. In contrast to other food manufacturers such as Kraft Heinz (KHC) and Campbell Soup (CPB), whose main exposure is to the U.S. market, Mondelez is much more diversified – both in terms of geographical exposure and in terms of food category.

Improving Metrics

Mondelez has been improving its financial metrics over the past few years since its initial separation from legendary Kraft. In its most recent quarter, Mondelez generated net revenues in the amount of $6.28 billion, up 1.2 percent, in terms of organic revenue, compared to the same quarter last year. Especially notable was the emerging market countries with Latin America and Asia and Africa recording growth of 4.6 percent each during the past quarter. On the bottom line, earnings were $0.62 per share, up an impressive 18 percent compared to the same quarter last year, driven by favorability in taxes, operating gains and fewer shares outstanding.

Mondelez

ChartKHC data by YCharts

ChartMDLZ data by YCharts

This article was written by

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1.79K Followers
Global Value Finder is a top investment research firm. We focus on global large cap equities - trading on the U.S markets and in Europe and Asia. Our focus is on finding mispriced value opportunities, dividend ideas and special situations. We have been publishing high-quality actionable research on Seeking Alpha for over a decade, with a proven track record of stellar results. Follow the GVF team so we can also work for you, GVF

Disclosure: I am/we are long MDLZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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