Mondelez Stock Slips Even Though the Snack Maker Beat Earnings Estimates

The back story. Mondelez shares (ticker: MDLZ) have risen 32% year to date, easily outpacing both the S&P 500 and the Consumer Staples Select Sector ETF (XLP), with gains of just over 20%. Staples companies have done well in general, as investors seek defensive stocks amid ongoing uncertainty about the geopolitical and global economic outlook and search for sources of yield in a low-interest-rate environment. (Mondelez raised its dividend payout this summer after reporting in-line results). Analysts like the stock, while Barron’s has noted its shareholders-friendly policies, and some see the growing popularity of CBD products as a future avenue of growth for Mondelez.

What’s new. After the close of regular trading Tuesday, Mondelez said it earned 64 cents a share on revenue of $6.36 billion, surpassing analysts’ expectations for earnings per share (EPS) of 60 cents on revenue of $6.34 billion.

The company boosted its prediction for 3% full-year organic net revenue guidance, saying it now expects growth of 3.5%. Mondelez also raised its adjusted EPS outlook, as it now sees 5% to 7% growth, up from 5% in its prior forecast. However, foreign exchange will weigh on both metrics: Currency translation will decrease revenue by 4%, up from 3% Mondelez previously expected, and will reduce adjusted EPS by 14 cents, up from 11 cents.

Looking ahead. Mondelez had a decent quarter, but with the shares staging such a strong rally recently, investors might have been hoping for more. The fact that currency will continue to weigh on the company isn’t a surprise, but, given that organic net revenue climbed 4.6% in the previous quarter, markets might have been hoping that Mondelez would raise guidance higher than it did. They might also have been anticipating an increase in free cash flow forecast.

Mondelez was down 1.6% to $52 at a recent check. The shares closed up 0.8%, at $52.83, in regular trading.

Write to Teresa Rivas at teresa.rivas@barrons.com