It isn’t easy for a legacy business to grow, but this company’s management is confidently predicting higher top- and bottom-line numbers.
Confident comments from a top executive at Mondelēz International (MDLZ 4.18%) about the company’s immediate future drove up its share price on Wednesday. The food company’s stock rose by more than 4% largely as a result, on a day when the S&P 500 index sagged marginally by 0.2%.
Unwrapping fresh growth
The individual behind the rosy pronouncements was Mondelēz’s chief financial officer, Luca Zaramella. Speaking at a conference for the consumer staples industry, he waxed bullish on his company’s current quarter. He said without elaboration that it posted “solid numbers” for July and August, adding, “I think you will be pleased with the numbers you’re going to see in Q3.”
Getting somewhat into the weeds, he cited reduced prices for cocoa — a foundational ingredient in the many chocolate products the company sells — as one factor in the recent profitability improvements. He implied that the resulting lower costs give management the scope to increase promotional activities for relatively sluggish goods.
Overall, management is counting on 2024 to be a year of growth. In July, it published its second-quarter figures and proffered guidance of net revenue growth ranging from 3% to 5%. It’s also modeling adjusted per-share earnings growth in the high single-digit percentages on a constant-currency basis.
A laggard no more
Since that earnings report, the usually laggard stock’s growth has outpaced the S&P 500 index by 12% to less than 2%. Investors are clearly buying this growth story and the anticipated increases in key fundamentals; it will now be up to management to deliver them.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
