What Awaits Mondelez (MDLZ) as It Readies for Q3 Earnings?
Mondelez International, Inc. MDLZ is likely to register top-and-bottom-line growth when it reports third-quarter 2023 earnings on Nov 1. The Zacks Consensus Estimate for revenues is pegged at $8.8 billion, suggesting a rise of 13.2% from the prior-year quarter’s reported figure.
The consensus mark for quarterly earnings has declined by a penny in the past 30 days to 78 cents per share. This calls for growth of 5.4% from the year-ago quarter’s reported figure. MDLZ has a trailing four-quarter earnings surprise of 8.3%, on average.
Factors to Note
Strength in the core chocolate and biscuit categories is likely to aid results in the quarter under review. As consumers prefer snacking over traditional meals, the company’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. Consumers in developed countries consider chocolates and biscuits as affordable indulgences and one of the most-valued snacking products.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
On its last earnings call, management stated that it expects solid volume momentum for both these categories as it moves forward in 2023. This bodes well for the third quarter. Our model estimate for revenue growth in the chocolate and biscuit categories for the third quarter stands at 14% and 6.8%, respectively.
Continuous reinvestments in brands and capabilities, along with effective pricing actions and saving efforts, have been working well for the company. Mondelez has been benefiting from the contributions of its prudent acquisitions, especially in the key snacking space. Strength in emerging markets has also been an upside. We expect emerging market revenue growth of 9.7% in the third quarter.
However, Mondelez has been battling cost inflation for a while now. In its second-quarter 2023 earnings release, Mondelez stated that it still expects a double-digit increase in inflation stemming from the continued elevated cost of packaging, ingredients and labor. Our model suggests an adjusted gross margin contraction of 190 basis points to 35.5% in the quarter under review.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Mondelez this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.
Mondelez carries a Zacks Rank #4 (Sell) and has an Earnings ESP of -0.56%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are three companies worth considering as our model shows that these have the correct combination to beat on earnings this time:
e.l.f. Beauty ELF currently has an Earnings ESP of +0.42% and a Zacks Rank #1. The company is likely to register top and bottom-line growth when it reports third-quarter 2023 numbers. The Zacks Consensus Estimate for e.l.f. Beauty’s quarterly earnings per share of 54 cents suggests an increase of 50% from the year-ago quarter’s levels. You can see the complete list of today’s Zacks #1 Rank stocks here.
ELF has a trailing four-quarter negative earnings surprise of 108.3%, on average. The Zacks Consensus Estimate for e.l.f. Beauty’s quarterly revenues is pegged at $197.3 million, indicating a rise of 61.2% from the figure reported in the prior-year quarter.
Church & Dwight Co. CHD has an Earnings ESP of +2.21% and a Zacks Rank #3. The company is slated to witness top-line growth when it reports third-quarter 2023 results. The Zacks Consensus Estimate for CHD’s quarterly revenues is pegged at $1.43 billion, which suggests growth of 8.7% from the figure reported in the prior-year quarter.
Although the Zacks Consensus Estimate for Church & Dwight’s quarterly earnings has moved up by a penny over the past 30 days to 68 cents per share, it suggests a decline of 10.5% from the year-ago quarter’s reported number. CHD delivered an earnings surprise of 12.1%, on average, in the trailing four quarters.
Monster Beverage MNST currently has an Earnings ESP of +1.98% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports third-quarter 2023 results. The Zacks Consensus Estimate for Monster Beverage’s quarterly revenues is pegged at $1.9 billion, suggesting growth of 14.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has remained unchanged in the past 30 days at 40 cents per share, which indicates 33.3% growth from the year-ago quarter's reported number. MNST delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
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Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
Mondelez International, Inc. (MDLZ) : Free Stock Analysis Report
e.l.f. Beauty (ELF) : Free Stock Analysis Report
