Should I buy Mondelez shares after a strong Q3 report?
- Mondelez reported strong Q3 results
- Organic sales rose 5.5% in Q3
- Market share remains higher than pre-COVID
Mondelez International, Inc. (NASDAQ :MDLZ) shares are trading only 5% below their record highs after the company reported better than expected third fiscal quarter results last week.
Mondelez’s business continued to grow throughout the third fiscal quarter, and the company’s management expects to deliver organic revenue growth for the 2021 fiscal year of 4.5% to 5%.
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Market share remains higher than pre-COVID
Mondelez is an American multinational confectionery, food, beverage, and snack company that operates in more than 150 countries worldwide.
The company has its origins as Kraft Foods, but in 2012, Kraft Foods changed its name to Mondelez and retained its snack food business, while its grocery business was spun off to a new company called Kraft Foods Group.
Mondelez reported better than expected third fiscal quarter results on Tuesday; total revenue has increased by 7.6% Y/Y to $7.18 billion, while the GAAP EPS was $0.89 (beats by $0.23).
It is important to mention that revenue in Europe grew 4.6% in the third quarter compared with the same period last year while revenue in North America grew 0.3%.
Total revenue has increased above expectations (+120 million), organic sales rose 5.5%, and the company’s management remains very optimistic about the upcoming quarters in terms of growth. Dirk Van De Put, CEO of Mondelez, added:
These results were marked by a continuation of the solid volume growth that we are used to, as well as higher contribution from pricing as we successfully executed pricing actions in multiple markets in light of the inflationary environments.
Mondelez expects to deliver organic revenue growth for the 2021 fiscal year of 4.5% to 5% and comparable EPS growth of high single-digit compared with the previous year.
Demand for Mondelez products remains very strong across both developed and emerging markets, while the company’s market share remains higher than pre-COVID as a result of strength in execution.
Mondelez delivered a free cash flow of $700 million in the third quarter and repurchased around $1.8 billion in shares in the first three quarters of the 2021 year.
Mondelez International began the fourth fiscal quarter in a strong position, the company’s 2.25% dividend looks safe, and management is taking actions to improve the profitability outlook.
Fundamentally looking, Mondelez trades at less than fifteen times TTM EBITDA, and with a market capitalization of $86.8 billion, shares of this company are reasonably valued.
Bulls control the price action
Mondelez shares have advanced again above $62 after the company reported better than expected third fiscal quarter results last week, and if the price jumps above $65 resistance, we have the open way to $70.
Mondelez shares remain in a buy zone; still, if the price falls below the $55 support level, it would be a strong “sell” signal and probably a trend reversal sign.
Mondelez continues to improve its position in the market, and the company reported better than expected third-quarter results on Tuesday. The company’s market share remains higher than pre-COVID, while its management expects to deliver organic revenue growth for the 2021 fiscal year of 4.5% to 5%.