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Why Did Mondelez’s Stock Price Fall after Its 2Q16 Results?

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Stock fell after 2Q16 results

On July 27, Mondelez International (MDLZ), the maker of Cadbury chocolates and Oreo cookies, reported its fiscal 2Q16 results. The stock fell 3% with a heavy trading volume despite earnings beating analysts’ estimates by 10%. However, revenue missed estimates for the quarter. The stock closed 3% lower at $43.94—compared to its closing price of $45.25 the previous day. We’ll discuss its 2Q16 results more in the series.

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As of July 27, Mondelez’s stock hasn’t appreciated much since its last quarter earnings release. However, the stock rose 3% after its 1Q16 results when earnings exceeded estimates by 20%. The company’s strong start to 2016 benefited its stock. It also increased 6% on June 30 when it sent a preliminary letter of proposal to Hershey with a takeover bid of $23 billion. Mondelez’s market value as of July 27 is $68.2 billion. Mondelez gained 22% in 2015. So far, the stock hasn’t appreciated in 2016 as of July 27. It closed at $43.94.

Peers’ stock performance

So far, peers Hershey (HSY), Kraft Heinz (KHC), and Kellogg (K) have returned 23%, 18%, and 13% in 2016. Hershey, Kraft Heinz, and Kellogg closed trade at $108.19, $85.63, and $81.27, respectively, on July 27. Mondelez is part of the First Trust Consumer Staples AlphaDEX Fund (FXG) and the PowerShares Dynamic Food and Beverage (PBJ). PBJ holds ~10% in Mondelez.

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About the company

Mondelez was formed in October 2012 when it separated from Kraft Foods Group. Kraft Foods Group’s North America business was renamed Mondelez International. The company holds a $9 billion dollar portfolio of brands. It’s one of the largest snack food companies in the world. Its primary product categories include crackers, chocolate, candy, beverages, cheese, and groceries. The company’s portfolio consists of 58 brands. Its power brands include Cadbury chocolate, Oreo cookies, Trident gum, Jacobs coffee, and Tang powdered beverages.

What’s in the series?

In the rest of this series, we’ll discuss how Mondelez performed in 2Q16. We’ll also dive into the segment’s performance and what contributed to margin expansion for the quarter. Later, we’ll see how much Mondelez returned to its shareholders to date. We’ll also discuss the company’s outlook for 2016 and Wall Street analysts’ target price and recommendations. At the end of the series, we’ll see how Mondelez compares to its peers’ key moving averages.

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