It has been about a month since the last earnings report for Mondelez (MDLZ). Shares have added about 15.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Mondelez due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Mondelez Q4 Earnings Miss Estimates Amid Escalated Cocoa Inflation

Mondelez International reported fourth-quarter 2024 results, wherein adjusted earnings were 65 cents per share, which decreased 15.9% on a constant-currency (cc) basis. The metric missed the Zacks Consensus Estimate of earnings of 66 cents per share. This decline was mainly caused by decreased operating results and lower equity method investment earnings, somewhat offset by reduced taxes and shares outstanding.

Net revenues increased 3.1% year over year to $9,604 million, driven by effective pricing strategies and positive volume/mix growth. However, the metric came below the Zacks Consensus Estimate of $9,691.7 million. Organic net revenues grew 5.2% year over year in the fourth quarter. The upside was primarily fueled by a 5.1 percentage point (pp) increase in net pricing, alongside a favorable volume/mix impact of 0.1 pp. Our model estimated organic net revenue growth of 5.6%.

Revenues from emerging markets increased 1.7% to $3,640 million and rose 6.7% on an organic basis. The growth was backed by favorable pricing actions (up 6.5 pp) and volume/mix (up 0.2 pp). The company saw growth trends across countries like South Africa, China and Brazil among others. Revenues from developed markets increased 4% to $5,964 million while increasing 4.3% on an organic basis, reflecting solid growth from Europe and the U.S. Developed markets saw a volume/mix increase of 0.1 pp while pricing was favorable by 4.2 pp.

Region-wise, revenues in Latin America dropped 7.2%, while the metric in Asia, the Middle East & Africa and Europe grew 9.9% and 5.8%, respectively. In the North American regions, revenues inched up 0.1%. On an organic basis, revenues rose 4.9%, 8.6%, 7.4% and 0.4% in Latin America, Asia, the Middle East & Africa, Europe and North America, respectively.

The adjusted gross profit fell by $440 million at cc, and the adjusted gross profit margin contracted by 650 basis points (bps), reaching 31.5%. This decline was mainly due to increased raw material and transportation costs, somewhat offset by favorable pricing and reduced manufacturing costs stemming from improved productivity.

Mondelez’s adjusted operating income declined by $396 million at cc, while the adjusted operating income margin contracted 510 bps to 10%. This decrease was mainly caused by escalated input cost inflation, partially mitigated by favorable net pricing, overhead leverage and lower manufacturing costs resulting from productivity improvements.

What to Expect From MDLZ in 2025?

Mondelez projects organic net revenue growth of around 5% in 2025. The adjusted earnings per share (EPS) is expected to decline by nearly 10% on a cc basis, thanks to unprecedented cocoa cost inflation. The company anticipates that currency translation will reduce 2025 net revenue growth by roughly 2.5%, with a negative impact of 12 cents on adjusted EPS.

The company anticipates a double-digit increase in inflation for 2025, largely driven by cocoa costs and some labor expenses. Regarding interest expense, the company expects it to be nearly $350 million in the year. In addition, the company projects an adjusted effective tax rate in the mid-20s range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -15.95% due to these changes.

VGM Scores

At this time, Mondelez has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Mondelez has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Mondelez belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Sysco (SYY), has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended December 2024.

Sysco reported revenues of $20.15 billion in the last reported quarter, representing a year-over-year change of +4.5%. EPS of $0.93 for the same period compares with $0.89 a year ago.

For the current quarter, Sysco is expected to post earnings of $1.04 per share, indicating a change of +8.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Sysco. Also, the stock has a VGM Score of A.

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This article originally published on Zacks Investment Research (zacks.com).

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