Mondelez (MDLZ)

Packaged snacks company Mondelez (NASDAQ:MDLZ) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 5.9% year on year to $9.74 billion. Its non-GAAP profit of $0.73 per share was 2.9% above analysts’ consensus estimates.

Company Overview

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

As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.

Competitors in the packaged snacks and confectionary space include PepsiCo (NASDAQ:PEP), Nestle (SWX:NESN), Hershey (NYSE:HSY), and Kraft Heinz (NASDAQ:KHC).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $37.65 billion in revenue over the past 12 months, Mondelez is one of the most widely recognized consumer staples companies. Its influence over consumers gives it negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don’t have).

As you can see below, Mondelez grew its sales at a decent 7.3% compounded annual growth rate over the last three years despite consumers buying less of its products. We’ll explore what this means in the "Volume Growth" section.

This quarter, Mondelez grew its revenue by 5.9% year on year, and its $9.74 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, similar to its three-year rate. We still think its growth trajectory is satisfactory given its scale and indicates the market sees success for its products.

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

To analyze whether Mondelez generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.

Over the last two years, Mondelez’s average quarterly sales volumes have shrunk by 1.2%. This decrease isn’t ideal as the quantity demanded for consumer staples products is typically stable. Luckily, Mondelez was able to offset fewer customers purchasing its products by charging higher prices, enabling it to generate 4.9% average organic revenue growth. We hope the company can grow its volumes soon, however, as consistent price increases (on top of inflation) aren’t sustainable over the long term unless the business is really really special.

In Mondelez’s Q3 2025, sales volumes dropped 4.6% year on year. This result represents a further deceleration from its historical levels, showing the business is struggling to move its products.

Mondelez’s unit economics are higher than the typical consumer staples company, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 34.8% gross margin over the last two years. That means for every $100 in revenue, $65.17 went towards paying for raw materials, production of goods, transportation, and distribution.

In Q3, Mondelez produced a 26.8% gross profit margin, down 5.8 percentage points year on year. Mondelez’s full-year margin has also been trending down over the past 12 months, decreasing by 7.7 percentage points. If this move continues, it could suggest deteriorating pricing power and higher input costs (such as raw materials and manufacturing expenses).

Mondelez has managed its cost base well over the last two years. It demonstrated solid profitability for a consumer staples business, producing an average operating margin of 13.7%.

Looking at the trend in its profitability, Mondelez’s operating margin decreased by 5.2 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Mondelez generated an operating margin profit margin of 7.6%, down 4.9 percentage points year on year. Since Mondelez’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, and administrative overhead expenses.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Mondelez reported adjusted EPS of $0.73, down from $0.99 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 2.9%. Over the next 12 months, Wall Street expects Mondelez’s full-year EPS of $2.85 to grow 13.9%.

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.

Mondelez has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 8.1% over the last two years, better than the broader consumer staples sector.

Taking a step back, we can see that Mondelez’s margin dropped by 4.2 percentage points over the last year. Continued declines could signal it is in the middle of an investment cycle.

Mondelez’s free cash flow clocked in at $418 million in Q3, equivalent to a 4.3% margin. The company’s cash profitability regressed as it was 6.5 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared 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 reported $1.37 billion of cash and $21.32 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $5.32 billion of EBITDA over the last 12 months, we view Mondelez’s 3.7× net-debt-to-EBITDA ratio as safe. We also see its $429 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Although its EPS beat, its EBITDA and gross margin fell short of Wall Street’s estimates due to "record-high cocoa cost inflation". Cocoa costs have been a persistent issue over the past year. Overall, this was a weaker quarter. The stock traded down 4.5% to $57.50 immediately following the results.

Updated: December 4, 2025 at 9:46 PM EST

Before investing in or passing on Mondelez, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Mondelez isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was decent over the last three years, it’s expected to deteriorate over the next 12 months and its declining operating margin shows the business has become less efficient. And while the company’s unparalleled brand awareness makes it a household name consumers consistently turn to, the downside is its cash profitability fell over the last year.

Mondelez’s P/E ratio based on the next 12 months is 18.3x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $69.02 on the company (compared to the current share price of $55.68).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.