Is Mondelez (MDLZ) Pricing Reflect Its Recent Share Gains And Cash Flow Outlook
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If you are wondering whether Mondelez International is fairly priced or offering value right now, this article will help you make sense of the numbers behind the share price.
The stock last closed at US$62.59, with returns of 4.3% over 7 days, 9.4% over 30 days, 16.7% year to date, 6.2% over 1 year, 1.5% over 3 years and 30.7% over 5 years.
Recent coverage around Mondelez has focused on its position as a large global snacks business and the way it continues to allocate capital between brand investment, acquisitions and shareholder returns. This context helps frame how investors are reacting to new information and what may be influencing the recent share price moves.
On Simply Wall St, Mondelez currently has a valuation score of 3 out of 6. This means it screens as undervalued on half of the checks that are applied. We will look at what those methods say next, then finish with a more complete way to think about value beyond a single score.
A Discounted Cash Flow model takes projected free cash flows and then discounts them back to today using a required rate of return to estimate what the business may be worth right now.
For Mondelez International, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $3.2b. Analyst estimates and subsequent extrapolations suggest free cash flow could be around $6.8b in 2035, with intermediate projections such as $3.8b in 2026 and $4.7b in 2028. Estimates beyond the analyst horizon are extrapolated by Simply Wall St rather than coming directly from the market.
Discounting this stream of projected cash flows back to today gives an estimated intrinsic value of US$107.46 per share. Compared with the recent share price of US$62.59, the model implies the stock trades at a 41.8% discount, so it screens as materially undervalued using this DCF approach alone.
For a profitable business like Mondelez International, the P/E ratio is a useful way to gauge what investors are paying for each dollar of earnings. A higher or lower P/E can make sense depending on what the market expects for future growth and how risky those earnings are perceived to be.
Mondelez currently trades on a P/E of 32.73x. That is above the Food industry average P/E of 24.10x and below the peer group average of 45.62x, so the stock sits between broader sector pricing and closer peers.
Simply Wall St also provides a proprietary “Fair Ratio” of 26.15x. This is an estimate of what a reasonable P/E could be for Mondelez after considering factors like its earnings growth profile, profit margins, industry, market cap and specific risks. Because it is tailored to the company, this Fair Ratio can be more informative than simply lining the stock up against broad industry or peer averages.
Comparing the Fair Ratio of 26.15x with the actual P/E of 32.73x suggests the shares are priced above this company specific reference point.
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, where you set out your story for Mondelez International, link it to your own expectations for future revenue, earnings and margins, and see how that flows through to a forecast and a Fair Value. You can then compare this with the current share price using an easy tool on Simply Wall St’s Community page that updates automatically when new news or earnings arrive. One investor might plug in a higher view, such as a Fair Value near US$88.00, while another might use more cautious assumptions closer to US$67.00, helping each of them decide how they feel about the gap between price and value.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
