Mondelez International, Inc.
) is set to report first-quarter 2014 results on May 7. Last
quarter, the company delivered a negative earnings surprise of
Let's see how things are shaping up for this announcement.
Factors to Consider this Quarter
Mondelez has been reporting soft top-line results ever since
it split from
Kraft Foods Group, Inc.
) in Oct 2012. Global snacking category slowdown, volatility in
some key markets and continuous slide in
have been weighing on the company's top line. Mondelez's
categories have slowed down in 2013 and are not expected to
accelerate much in the near term. The company's gum business has
also been down for the last few quarters, mainly in the developed
nations such as the U.S. and Europe.
Though the company expects to do better in 2014, the first
quarter is expected to be tough as most of the headwinds that
hurt results in the second half of 2013 are expected to
Revenues are expected to grow in the range of 2-3% in the
first quarter, lower than full-year expectations. Continued
biscuit weakness in China, lower coffee pricing and shift in
Easter timing to the second quarter are expected to hurt
first-quarter sales. Moreover, management expects to increase
pricing across most geographies in the first quarter to cover
higher commodity costs and currency headwinds. Increased pricing
is expected to hurt volumes in the quarter.
Though sales have been slower, Mondelez has delivered
relatively better margins through cost savings and
Our proven model does not conclusively show that Mondelez is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here, as you will see below.
Negative Zacks ESP:
The Earnings ESP is -6.06%.
Mondelez has a Zacks Rank #2 (Buy). However, the favorable rank
when combined with a negative ESP makes surprise prediction
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other consumer stapled stocks that have both a positive
Earnings ESP and a favorable Zacks Rank are:
The J. M. Smucker Company
) with Earnings ESP of +1.72% and a Zacks Rank #3 (Hold)
Diamond Foods, Inc.
), with Earnings ESP of +6.67% and a Zacks Rank #3.
DIAMOND FOODS (DMND): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
MONDELEZ INTL (MDLZ): Free Stock Analysis
SMUCKER JM (SJM): Free Stock Analysis Report
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