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If you’re looking for more reasons to have Oreos for breakfast, parent company Mondelez International Inc. might give you one.
Mondelez
MDLZ,
is giving Oreo doughnuts some consideration, according to the company. In April 2021, the company launched Oreo muffins, Oreo frosted cookies and cupcakes.
The products are part of the company’s plan to dive deeper into cakes and pastries. Mondelez announced the $2 billion acquisition of Chipitas S.A., a Central and Eastern European baked goods company, in May.
“It is a close adjacency to our core biscuit capabilities, and it is a fragmented category, which provides a clear opportunity for a company with the right brands and capabilities to gain a leadership position,” Dirk Van de Put, chief executive of Mondelez, said on the most recent earnings call, according to FactSet.
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Cakes and pastries are a $65 billion category with profitability potential, according to Van de Put.
“Both cakes and pastries typically have a higher net revenue per kilogram than cookies,” he said.
Mondelez’s portfolio includes Cadbury, Chips Ahoy, Ritz, Tang and Triscuit.
Mondelez reported second-quarter net income of $1.08 billion, or 76 cents per share, up from $544.0 million, or 38 cents per share, last year. Adjusted EPS of 66 cents beat the FactSet consensus for 65 cents.
Revenue of $6.64 billion was up from $5.91 billion and also ahead of the FactSet consensus for $6.41 billion.
For the full-year, Mondelez is forecasting 4%-plus revenue growth, and adjusted EPS growth in the high-single digits. The FactSet consensus is for revenue of $28.65 billion, suggesting growth of 7.8%, and EPS of $2.92, implying an increase of 11.6%.
“We believe the company will continue to be active with portfolio re-shaping both
through acquisitions in higher growth segments and adjacencies and through
potential divestitures as the company continues its strategic review of its developed markets gum business which stands over $500 million in revenue (2% of total revenues) and has been declining,” wrote Stifel analysts in a note.
Stifel rates Mondelez stock buy with a $67 price target.
Mondelez says the gum business benefited from increased mobility.
“We continue to see Mondelez as a must-own stock within our coverage universe, particularly for investors with multi-year time horizons,” wrote JPMorgan in a note.
“With most other food producers still facing significant margin risk from inflation over the next two to three quarters, Mondelez – with its limited inflation, inflation potentially peaking in 3Q21, and strong pricing power in many markets – stands out as a relatively dependable story.”
JPMorgan rates Mondelez overweight with a $73 price target.
Mondelez stock has gained 6.9% for the year to date while the S&P 500 index
SPX,
is up 18.6% for the period.
