Brian Madden MONDELEZ INTERNATIONAL INC Common Stock MDLZ-Q BUY Jul 22, 2024

Nothing much has changed in MDLZ’s fundamentals over the years, except the valuation has gone down and it is now trading at 18.8x times' Forward P/E ( a fair valuation given MDLZ consistently has traded above 20x). The leverage level has gone down meaningfully in recent years, and the net debt/EBITDA level is now at 1.9x, the lowest in years, indicating a capacity for raising dividends or buying back shares. The company has been a predictable grower, and we think MDLZ would be comfortable to grow 3%-5% for a very long time, it is an attractive dividend grower over time, but the business is mature and fairly low growth overall. We would be OK owning it for income but otherwise do not see it as overly interesting. 
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Still likes it. Concern now is that with higher interest rates and rising unemployment, consumers are being more price-conscious. Company has acknowledged this in its biscuit category. 

Reassessing pricing and packaging. EMs are about 40% of sales, she sees higher growth there. Selling assets, redeploying proceeds in higher-growth adjacent categories.

International snack giant. 200-day MA is sideways to slightly negative, stock price is now below it. Fundamentals show only mid-single-digit earnings growth, paying 20x for it. Cost pressures, margin compression. Intense competition. Foreign currency has not helped.

For a consumer staples name, look at Loblaw or COST.

It is a large consumer products company and has gone though re-structuring. Pays a rock solid dividend. Although high quality it is low growth so he sees better better value in the field.

Limited private-label competition. During pandemic, good at passing cost increases along to consumers without demand falling off. Concerns about impact of weight-loss drugs has abated. But huge increase in cocoa prices, at 47-year highs. Still happy to own.

Trades at 18x PE, with 5% growth. He likes growth at a reasonable price, so 5% doesn't cut it. Stock's moved below 200-day MA, which is falling. Short-term technicals look weak. Demand for GLP-1 drugs will impact a lot of companies in the food business.

These companies have traded off on the fears of GLP-1. Volumes starting to drop. Growth metrics just don't support the valuations in the space. About 60% of revenue from international sources, so strong USD is a major headwind.

Biggest issue is growth. Well run, amazing brands. Valuation north of 20x, yet growth profile not as robust. Economic uncertainty, bit of weakness in discretionary spending.

Buying Hershey's will be a large purchase for them. MDLZ is attractively priced, but he wouldn't buy. He prefers Lindt, which has outperformed. But he likes staples at this part of the cycle.