Mondelez Rises 8% in 3 Months: How Should You Play the Stock?

Zacks Equity Research
5 min read

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Mondelez International, Inc.’s MDLZ shares have gained 7.5% in the past three months, surpassing the industry and the broader S&P 500 index’s growth of 4.6% and 4.5%, respectively. This performance stems from a strategic emphasis on core categories and targeted initiatives to streamline and reshape the company's portfolio.

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MDLZ stock last traded at $71.91 and is 6.8% below its 52-week high of $77.20, touched on Feb. 2, 2024. The stock is trading above its 200-day moving average, which indicates robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in MDLZ’s financial health and prospects.

Let us take a deeper dive into Mondelez's fundamentals, market position and prospects to assess the optimal course of action for investors. Should they invest more or hold their current position? Let us analyze the situation further.

Decoding MDLZ’s Strategies

Mondelez has stayed focused and agile in executing its long-term growth strategies, centered around core categories such as chocolate, biscuits and baked snacks. These categories continue to be consumer’s favorites, driven by strong loyalty to the company’s iconic brands. MDLZ’s broad geographic reach further reinforces its ability to achieve sustained long-term growth.

As inflation eases, Mondelez is experiencing a rebound in volume growth. This shift has led to a slowdown in private-label growth across key categories, while branded products are gaining market share. Despite softness in many food and beverage segments, the snacking category remains resilient, further supporting the company’s performance.

Mondelez is experiencing positive value growth in biscuits and chocolate categories with seasonal chocolate volumes increasing 0.6% year to date, per the second-quarter earnings release. This growth is driven by robust demand for seasonal shapes, novelties and bite-sized products. Consumers are demonstrating their willingness to spend, highlighting that holidays like Easter are incomplete without chocolate.

Mondelez has always been keen on reshaping its portfolio through prudent acquisitions and divestitures. On Oct. 1, 2024, Mondelez announced that its corporate venture capital arm, SnackFutures Ventures, has acquired a minority stake in Urban Legend, a rapidly growing “better-for-you” fresh doughnut and pastry company in the United Kingdom. This should help Mondelez to enhance its capabilities in the fast-growing fresh bakery space.

What May Pull Back Mondelez’s Momentum?

Mondelez is navigating a challenging and dynamic operating environment, marked by rising input costs and varying levels of consumer uncertainty across regions. In North America, some consumers seek budget-friendly snacks, while others prefer multipacks for better value and convenience. China and Brazil demonstrate resilience, but India struggles with food inflation and economic pressures, resulting in shifts in spending habits and down-trading behavior.

Mondelez has also been grappling with rising cocoa prices, which have put significant cost pressures on its chocolate segment. Mondelez expects high cocoa prices to serve as a significant headwind in the second half of 2024.

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