RBC highlights 3 positive takeaways from Mondelez’s Earnings

By: Jayson Derrick
Jayson Derrick
Jayson lives in Montreal with his wife and daughter, loves watching hockey, and is on a lifelong quest to… read more.
on Jul 28, 2021
  • Mondelez reported a top-and-bottom-line beat in its Q2 results.
  • RBC analyst Nik Modi said management "sounded confident" for the rest of 2021.
  • Modi maintained a bullish stance on MDLZ stock.

Snacks and food giant Mondelez International Inc (NASDAQ: MDLZ) reported Tuesday a “solid” topline beat in its second quarter results that justifies a continued bullish stance on the stock, according to RBC Capital Markets analyst Nik Modi.

3 key takeaways from MDLZ Q2

Mondelez reported second quarter EPS of 66 cents on revenue of $6.64 billion versus expectations of 64.8 cents per share and revenue of $6.5 billion. The company said in the earnings report it saw strength across the “vast majority” of geographies, categories, and brands.

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Commenting on the report, Modi highlighted three key takeaways from what he describes as a “nice” quarter. First, the company reported year-over-year top-line growth of 12.4% versus the research firm’s estimate of 9.7%. Notably, North America’s organic top-line growth of negative 0.3% was “well ahead” of expectations of down 3%.

Second, emerging markets “remained resilient” despite a surge in COVID-19 infection cases in key regions, the analyst wrote. Specifically, organic growth was up 16.5% on a 10.6% volume growth and 5.9% increase in pricing.

Finally, management revised its organic sales growth outlook higher from 3% to 4%. While the company rightfully kept a conservative bottom-line outlook, management nevertheless “sounded confident” for the remainder of the year.

Bullish stance maintained

Modi maintained an Outperform rating on Mondelez’s stock with an unchanged $69 price target. The analyst’s target is based on recent success in management’s focus away from margin expansion to growth-oriented and organizational improvements. A more “nimble decision-making” organization should also translate to accelerating market share gains and outperformance.

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