Mondelez International (MDLZ)
Consumo básico / Bocadillos empacados
One of the world's largest snack makers (Oreo, Cadbury, Milka, Ritz) hit by a cocoa cost shock that cut operating profit in half in FY2025. At $63 today's P/E (~29x) looks high because it is applied to depressed earnings; valuing normalized earnings at 17.5x (the low end of the consumer staples band, given the moat under pressure), 5-year base case $67 (+1%/year price, +5% with dividend): Fairly valued.
- Price
- $63.46
- Intrinsic value (5y, base)
- $67
- Total annual return (5y)
- 4.6%
- Status (nominal)
- Fairly valued
- Margin of safety
- +0%
The essentials
- One of the world's largest snack makers: a portfolio of iconic brands (Oreo, Ritz, LU, Clif Bar, Tate's Bake Shop in biscuits and baked snacks; Cadbury Dairy Milk, Milka and Toblerone in chocolate), a presence in more than 150 countries, and leadership positions in most of its categories.
- But the cocoa cost shock crushed profitability: operating income fell from $6.3bn (FY2024) to $3.5bn (FY2025) — nearly by half — while volume declined across all four regions (−3.7pp) and price (+8.0pp) barely offset the input cost.
- At $63 today's P/E (~29x) is misleading because it is calculated on depressed earnings; the valuation uses normalized earnings at 17.5x — at the low end of the consumer staples band, because the moat shows signs of erosion (private label, negative volume). 5-year base case $67: Fairly valued.
Intrinsic value — two valuation methods
Total return at 5 years: 4.6%/year = 1.0% appreciation + 3.6% dividend. The target price ($67) is ex-dividend; the $12 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $76 · Multiples $64) exceeds the market price ($63).
Pillars of the analysis
The verdict — today vs 5 years
Today — fairly valued: at $63 trades close to its value discounted to today (~$64); the discount is positive but does not reach the margin of safety we require (≥38%).
At 5 years — En valor: the target price ($67) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.
The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$41.
Thesis
The business
Mondelez is one of the world's largest snack makers, with a portfolio of iconic brands (Oreo, Cadbury, Milka, Ritz, Toblerone) and global manufacturing and distribution scale. But 2025 was a year of genuine shock: operating income fell by half as cocoa costs spiked, and volume — not just price — declined across all four regions, a sign that the moat is under pressure (private label, category weakness) and not merely working through a transitory cost cycle.
The valuation
A consumer staple is valued on P/E over comparable net income. The problem today is that this earnings figure is depressed by cocoa: today's P/E (~29x) applied to $2.6bn (TTM) of earnings looks expensive, but this is a trough earnings level, not the run-rate. The base case projects comparable earnings recovering gradually — without returning to the FY2024 peak, because the company itself guides cocoa costs 'still elevated versus historical levels' even in 2026 — and an exit multiple of 17.5x (within the 16-22x band for a consumer staple, but at the low end given the moat's eroding direction and a return on capital barely at the edge of the 10% bar). That produces $67/share at five years.
The margin of safety
It trades close to intrinsic value, far from the required margin of safety. The case depends, above all, on how quickly and how far cocoa costs normalize — the dominant driver of the base case. The verdict is Fairly valued: neither an obvious bargain nor an overvalued position, with the outcome highly sensitive to the actual pace of margin recovery.
What to watch
The central gauge is cocoa cost: if the moderation guided for 2026 fails to materialize, the margin stays anchored near today's trough and the entire base case is revised. Second, the volume trend by region — whether price elasticity intensifies or private label keeps gaining ground in biscuits — because that is where the moat is truly tested. Third, dividend coverage: today the dividend plus buybacks combined exceed real free cash flow, and the buyback has already been cut sharply to protect the dividend — watch whether that gap closes as the margin recovers.
Educational / informational. Does not constitute investment advice.