Is There an Opportunity in Mondelez After Recent Slide and Product Launches?

• Curious if Mondelez International's stock is a hidden bargain or if you're chasing yesterday's growth? Let’s break it down together, focusing on what the numbers are really saying right now.
• While the stock is up a modest 0.2% over the past 7 days, it has slipped 8.0% in the last month and is down 4.2% year-to-date. Investors might wonder if market sentiment is shifting or if new opportunities are opening up.
• Recent headlines have highlighted shifts in consumer demand and changing cost pressures for major food companies, with Mondelez navigating both inflationary headwinds and evolving consumer snacking preferences. Reports of new product launches and global expansion moves add more context to these recent price movements.
• Mondelez scores a strong 5/6 on our valuation checks, signaling that it is undervalued in most key areas. However, numbers are just the beginning. We will explore standard valuation approaches and finish with a perspective that reveals what traditional models might miss.

Mondelez International delivered -8.8% returns over the last year. See how this stacks up to the rest of the Food industry.

Approach 1: Mondelez International Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by forecasting its future cash flows and discounting them back to present value, reflecting what those future dollars are worth right now. Essentially, it tries to answer how much the business is worth if you bought every dollar of its future cash flow today.

For Mondelez International, the DCF model begins with its latest twelve-month free cash flow of $2.31 Billion. Analysts project this figure will grow steadily, reaching approximately $4.94 Billion by 2028. Further estimates beyond five years are modeled using modest growth rates, with total free cash flows projected to surpass $7.5 Billion by 2035, according to Simply Wall St’s multi-stage approach.

Using the DCF method, the estimated fair value per share lands at $113.95. With the current stock price trading at a roughly 50 percent discount to this intrinsic value, the analysis strongly indicates that Mondelez shares are undervalued based on the company’s future cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Mondelez International is undervalued by 50.0%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Mondelez International.

Approach 2: Mondelez International Price vs Earnings

The Price-to-Earnings (PE) ratio is a common and reliable tool for valuing profitable companies like Mondelez International. It measures how much investors are willing to pay for each dollar of the company’s current earnings, making it especially useful for businesses with consistent profitability.

Generally, a higher PE ratio can reflect strong growth expectations, while a lower one might imply higher risk or limited growth prospects. What is considered “normal” or “fair” will therefore depend on how fast the company is expected to grow and the stability of its earnings.

Mondelez International currently trades at a PE ratio of 20.8x, which puts it above the food industry average of 19.4x but below the average for its direct peers at 24.8x. To cut through the noise, Simply Wall St’s proprietary “Fair Ratio” gives a forward-looking benchmark. For Mondelez, this Fair Ratio is 22.0x, reflecting the company’s growth outlook, risk profile, profit margins, and its scale within the market.

The Fair Ratio goes beyond a simple comparison to industry averages or peers. It uniquely factors in Mondelez’s specific fundamentals, including growth rates, margins, and risks, which are the aspects that matter most for fair value estimates. That means it is a more nuanced and tailored benchmark than standard averages.

Since Mondelez’s actual PE of 20.8x is close to the Fair Ratio of 22.0x, the stock appears to be valued about right based on this approach.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1422 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Mondelez International Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal investment story, a perspective that explains why you believe a company will (or will not) succeed, paired with your own expectations for its future revenue growth, earnings, and profit margins.

More than just a number, a Narrative links the story you see in Mondelez International's strategy or challenges directly to a financial forecast, which quickly translates into an estimated fair value for the stock. This approach is both powerful and accessible, available for free to millions of investors right within the Simply Wall St Community page.

Narratives help you decide when to buy or sell by comparing your Fair Value (based on your assumptions or consensus) to the actual share price, and because they update dynamically as the latest news or earnings roll in, you are always making decisions based on up-to-date insights.

For example, looking at recent investor Narratives for Mondelez International, the most optimistic forecast assumes strong recovery in margins and a price target as high as $88. The most cautious sees ongoing cost and demand pressures keeping fair value closer to $67, demonstrating how different outlooks can lead to different, actionable conclusions.

Do you think there's more to the story for Mondelez International? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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