MONDELEZ INTERNATIONAL INC. $35 (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.7 billion; Market cap: $59.5 billion; Price-to-sales ratio: 1.8; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.mondelezinternational.com) took its current form on October 1, 2012, when the old Kraft Foods Inc. broke itself into two publicly traded companies: Mondelez International and Kraft Foods Group.
Mondelez makes cookies and biscuits (Oreo, Chips Ahoy, Ritz), chocolate bars (Cadbury, Toblerone) and gum and candy (Trident, Chiclets and Halls cough drops). It also makes beverages, including coffee (Tassimo) and powdered fruit drinks (Tang), as well as grocery and cheese products for overseas markets. The company gets 40% of its sales from developing countries, 40% from Europe and 20% from North America.
Mondelez has now completed its plan to cut its annual costs by $800 million following its 2010 purchase of U.K.-based chocolate maker Cadbury.
Thanks to these savings, the company’s earnings before restructuring costs rose 7.2% in 2013, to $2.7 billion, or $1.51 a share. In 2012, it earned $2.5 billion, or $1.41.
Revenue rose 0.8%, to $35.3 billion from $35.0 billion. Higher volumes and prices boosted sales in all regions except Asia and Latin America. However, the high U.S. dollar hurt the contribution of Mondelez’s overseas operations. Excluding the impact of acquisitions and exchange rates, revenue rose 3.9% in 2013.
The company ended the year with cash of $2.7 billion, or $1.56 a share. Its long-term debt of $14.5 billion is a moderate 24% of its market cap.
Mondelez stands to gain from several trends. For example, many consumers are eating more snacks and shifting away from large meals at fixed times. At the same time, rising prosperity is making the company’s products more affordable in emerging markets. It also faces little competition from private-label snacks.
The stock has gained 25% since the Kraft Foods breakup, and might need time to make further gains. Moreover, it trades at 20.6 times Mondelez’s projected 2014 earnings of $1.70 a share, which adds risk. The $0.56 dividend yields 1.6%.
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