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Susquehanna Upgrades Mondelez International to ‘Positive’

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Price movement

Mondelez International (MDLZ) has a market cap of $71.1 billion. It rose by 1.4% to close at $45.76 per share on July 25, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 0.75%, 2.5%, and 2.9%, respectively, on the same day. MDLZ is trading 2.3% above its 20-day moving average, 3.1% above its 50-day moving average, and 6.7% above its 200-day moving average.

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Related ETF and peers

The Fidelity MSCI Consumer Staples ETF (FSTA) invests 3.6% of its holdings in Mondelez International. The ETF tracks a market-cap-weighted index of stocks in the US consumer staples sector. The YTD price movement of FSTA was 10.2% on July 25.

The market caps of Mondelez’s competitors are as follows:

  • PepsiCo (PEP)—$157.3 billion
  • General Mills (GIS)—$42.8 billion
  • Hershey (HSY)—$23.6 billion

Mondelez’s rating and performance in 1Q16

Susquehanna has upgraded Mondelez International rating to “positive” from “neutral” and also set the price target at $60.0 per share.

Mondelez International reported 1Q16 net revenue of $6.5 billion—a fall of 16.8%, as compared to net revenue of $7.8 billion in 1Q15. Below are the 1Q16 revenues for its regions compared to 1Q15:

  • Latin America—35.0%
  • Asia-Pacific—2.3%
  • Eastern Europe—21.3%
  • Europe, the Middle East, and Africa—23.1%
  • North America—4%

The company’s gross profit margin rose by 3.7%, and its operating income fell by 11.0% in 1Q16 compared to the prior year. Its net income and EPS (earnings per share) rose to $554.0 million and $0.35, respectively, in 1Q16 compared to $324.0 million and $0.19, respectively, in 1Q15.

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Mondelez International’s cash and cash equivalents fell by 28.4%, and its inventories rose by 5.6% in 1Q16 compared to 4Q15. Its current ratio fell to 0.68x, and its debt-to-equity ratio rose to 1.3x in 1Q16, as compared to 0.82x and 1.2x, respectively, in 4Q15. The company has repurchased ~$1.2 billion worth of its common stock at an average price of $41.04 per share. 

Quarterly dividend

Mondelez International has declared a regular quarterly dividend of $0.19 per share on its Class A common stock. The dividend will be paid on October 13, 2016, to shareholders of record as of September 30, 2016.

Projections

The company has made the following projections for 2016:

  • organic net revenue growth of at least 2%
  • adjusted operating income margin of 15%–16%
  • adjusted EPS growth in the double digits on a constant-currency basis

Now we’ll discuss General Mills.

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