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3 Reasons to Sell MDLZ and 1 Stock to Buy Instead

By: StockStory

April 11, 2025 at 05:03 AM EDT

MDLZ Cover Image

Mondelez trades at $66.06 per share and has stayed right on track with the overall market, losing 6.5% over the last six months while the S&P 500 is down 9.8%. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Is there a buying opportunity in Mondelez, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

Despite the more favorable entry price, we don't have much confidence in Mondelez. Here are three reasons why there are better opportunities than MDLZ and a stock we'd rather own.

Why Is Mondelez Not Exciting?

Founded as Nabisco in 1903, Mondelez (NASDAQ: MDLZ) is a packaged snacks powerhouse best known for its Oreo, Cadbury, Toblerone, Ritz, and Trident brands.

1. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Mondelez’s revenue to rise by 2.9%, a deceleration versus its 8.3% annualized growth for the past three years. This projection doesn't excite us and implies its products will face some demand challenges.

2. Free Cash Flow Margin Stuck in Neutral

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Mondelez’s margin was unchanged over the last year, showing it couldn’t improve. Its free cash flow margin for the trailing 12 months was 9.7%.

Mondelez Trailing 12-Month Free Cash Flow Margin

3. Previous Growth Initiatives Haven’t Impressed

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Mondelez historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.1%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Mondelez Trailing 12-Month Return On Invested Capital

Final Judgment

Mondelez isn’t a terrible business, but it doesn’t pass our quality test. Following the recent decline, the stock trades at 20.6× forward price-to-earnings (or $66.06 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better investment opportunities out there. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.

Stocks We Like More Than Mondelez

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.

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