Mondelez International, Inc. (MDLZ – Free Report) is likely to post revenue growth when it reports second-quarter 2022 results on July 26. announced figure.
However, Zacks’ consensus estimate for quarterly earnings fell a penny to 63 cents over the past seven days, suggesting a 4.6% drop from the figure reported in the year-ago quarter. This snack and beverage company has a surprise profit of 3.4% on average over the last four quarters. MDLZ achieved a 13.5% profit surprise in the latest reported quarter.
Factors to Note
Mondelez has struggled with cost inflation and supply chain headwinds for some time. These obstacles have been exacerbated by the war in Ukraine. The company is experiencing inflation in input costs, particularly for energy, transportation, packaging, wheat, dairy and edible oils. It also navigates through supply chain bottlenecks due to labor shortages at third parties. Management expects input cost inflation in the low double digit range for 2022, raising concerns for the quarter under review. Investments to support brands and other growth-oriented investments may also have impacted earnings.
Other than that, volatile currency movements are a headwind. In its first quarter 2022 earnings call, management said in 2022, currency movements are expected to negatively impact net revenue by nearly 3% and EPS-adjusted earnings per share by 17 cents in 2022. These are again likely to have affected the results for the quarter under review.
That said, management has taken the necessary steps in pricing, revenue growth management, cost containment and business simplification to counter current cost inflation. Gains from buyouts were also a driver for Mondelez. In addition, the strength of operations in emerging markets helped. In the first quarter of 2022, Emerging Markets revenue increased 15.6% to $2,964 million, while growing 16.5% on an organic basis. The continuation of these trends bodes well.
What the Zacks Model Reveals
Our proven model does not conclusively predict an earnings beat for MDLZ this time around. The combination of a positive earnings ESP and a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold) increases the chance of an earnings beat, which is not the case here.
Mondelez has a Zacks Rank #4 (sell) and an ESP on earnings of -2.70%. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.
Actions with favorable combination
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