Why Did Mondelēz International Rise ~4% on November 8?

Price movement

Mondelēz International (MDLZ) has a market cap of $72.2 billion. It rose 4.1% to close at $46.01 per share on November 8, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 3.6%, 6.9%, and 3.9%, respectively, on the same day. MDLZ is trading 6.8% above its 20-day moving average, 6.7% above its 50-day moving average, and 8.0% above its 200-day moving average.

Why Did Mondelēz International Rise ~4% on November 8?

Related ETF and peers

The Fidelity MSCI Consumer Staples ETF (FSTA) invests 3.2% of its holdings in Mondelēz International. The ETF tracks a market-cap-weighted index of stocks in the US consumer staples sector. The YTD price movement of FSTA was 5.8% on November 8. The market caps of Mondelēz’s competitors are as follows:

  • PepsiCo (PEP) — $156.0 billion
  • General Mills (GIS) — $37.8 billion
  • Hershey (HSY) — $21.7 billion

Latest news on Mondelēz

Mondelēz International rose more than 4% on November 8, 2016, after speculation that Kraft Heinz will acquire Mondelēz to expand its portfolio of brands. In a press release, Reuters reported, “3G Capital Inc, the buyout firm controlled by Brazilian billionaire financier Jorge Paulo Lemann, is raising between $8 billion and $10 billion to finance an acquisition of a global consumer goods firm, a Brazil-based blog said on Tuesday.”

It added that “according to the Brazil Journal blog, which cited people close to 3G, at least 10 wealthy Brazilian investors had already committed a minimum $100 million each to the new fund. Alexandre Behring, the 3G partner who is in charge of the firm’s day-to-day operations, has remained closely involved in the fundraising effort, the blog said.”

Performance of Mondelēz International in 3Q16

Mondelēz International reported 3Q16 net revenue of $6.4 billion, a fall of 5.9% from the net revenue of $6.8 billion in 3Q15, due to the deconsolidation of its Venezuela business and currency headwinds. Revenue from Latin America, EEMEA (Eastern Europe, the Middle East, and Africa), Europe, and North America fell 29.6%, 7.3%, 3.2%, and 0.2%, respectively, and revenue from the Asia-Pacific region rose 2.5% between 3Q15 and 3Q16. The company’s gross profit margin narrowed by ten basis points due to an increase in restructuring program costs. However, this rise was offset by the deconsolidation of its Venezuela operations.

Its net income and EPS (earnings per share) fell to $548.0 million and $0.35, respectively, in 3Q16, compared with $7.3 billion and $4.46, respectively, in 3Q15. It reported adjusted EPS of $0.52 in 3Q16, a rise of 36.8% over 3Q15.

Mondelēz’s cash and cash equivalents fell 9.8%, and its inventories rose 6.4% between 4Q15 and 3Q16. Its current ratio fell to 0.63x, and its debt-to-equity ratio rose to 1.3x in 3Q16, compared with 0.82x and 1.2x, respectively, in 4Q15.

Projections

Mondelēz has made the following projections for fiscal 2016:

  • organic net revenue growth of ~1.6%
  • adjusted operating income margin in the range of 15% to 16%
  • adjusted EPS growth of ~25% on a constant-currency basis

In the next part, we’ll discuss Newell Brands (NWL).