Mondelez International (MDLZ)

Total return at 5 years: 8.0%/year = 4.5% appreciation + 3.6% dividend. The target price ($77) is ex-dividend; the $12 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $89 · Multiples $72) exceeds the market price ($62).

Today — fairly valued: at $62 trades ~14.5% below its value discounted to today (~$72); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — En valor: the target price ($77) 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 ~$46.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($62) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-0.6%/year) than we project (7.5%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$3.6 bn of owner earnings in year 5 (vs ~$5.3 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on Utilidad neta ajustada (P/E). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Global packaged-snacks consumer staple: valued on P/E over adjusted net income, which gives equity value directly, with no enterprise-value-to-equity bridge. Rolling window: year-0 is the TTM closed June 30, 2026, built by levels from the second-quarter release (8-K of July 28, 2026) because the SEC API had not yet ingested that quarter: revenue of $39,675 million. The core change from the prior pass is the base of the earnings series. Previously the GAAP figure was used, and this quarter shows why it does not work: GAAP diluted EPS rose 144.9%, to $1.20, while the adjusted figure fell 2.7% in constant currency, to $0.73. The difference is not the business: it is a favorable swing in the mark-to-market of commodity and currency derivatives, lower pension plan charges, and early effects of tax changes. On the adjusted series the company itself reconciles line by line — and which is also the basis it guides on — the trailing year gives $4,834 million of adjusted operating income (12.18% margin) and $3,682 million of adjusted net income, or $2.85 per share, chaining fiscal 2025 ($2.92 per share, with a 13.2% adjusted operating margin) with the first halves of 2026 ($1.40) and 2025 ($1.47). Year 1 anchors to the guidance in the same release: organic revenue growth of at least 2% — raised from the prior range on the strength of the year to date — plus around 2.0 points of favorable currency tailwind, and adjusted EPS growing flat to 5% in constant currency plus $0.05 of currency, with free cash flow of around $3,000 million. On the rolling window that leaves 3.0% revenue growth and 8.7% adjusted earnings growth, and from year 2 revenue runs at 4.0%, the low-mid end of the consumer staple band. Adjusted operating margin recovers from 12.18% to 14.3% by year 5, deliberately below the 16.2% of fiscal 2024, because cocoa costs remain the dominant factor and the company does not project a full reversal. The 17.5x exit multiple sits in the low end of the staples band (16 to 22x): return on invested capital is 7.9%, below the 10% bar, and the moat shows an eroding direction. Cash does not accumulate: the dividend — which the company just raised 4% in the quarter — plus buybacks already consume nearly all of the cash flow, and the buyback continues at a moderate pace, with a net share reduction of 1.3% annually, the rate revealed between the second quarter of 2025 (1,308 million diluted shares) and that of 2026 (1,290 million).

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $77 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $62, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $77 in 5 years plus $12 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $72. Against the current market price ($62), the margin of safety is 14.5% (trades below the maximum → there is margin) and the total return at that price would be 8.0% annually.

• Multiple vs quality. Today's P/E is on cocoa-depressed earnings — deceptively high; the valuation uses 17.5x on normalized earnings, at the low end of the consumer staples band.
• Reverse DCF. The growth implied in today's price requires a margin recovery consistent with the base case — with no extra room for a further cocoa stumble.
• Margin of safety. The total expected return in the base case sits in the method's middle band — neither a bargain nor overvalued, with the outcome highly sensitive to the actual pace of cocoa normalization.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✓ High incremental ROIC (compounding)
• ✓ CFROIC backs up the ROIC (100%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• ROIC vs the 10% bar. The normalized (pre-shock) return runs at barely 10% — right at the edge of the bar; the current level, depressed by cocoa, is closer to 6%.
• Margin and stability. The operating margin collapsed by half in a single year (17.4%→9.2%) due to a single input — a margin fragility that a higher-quality consumer staple does not show to the same degree.
• Cash quality. Real free cash flow reconciles consistently with earnings — the decline is real (input cost), not an accounting artifact.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

The engine of a consumer staple is volume × price/mix. At Mondelez, volume is declining across all four regions (consolidated −3.7pp), and organic growth (+4.3% FY2025) comes almost entirely from price (+8.0pp) — defensive pricing against cocoa costs, not evidence of pure pricing power. The gap between emerging markets (pricing +10.5pp / volume −3.3pp) and developed markets (pricing +6.3pp / volume −3.8pp) shows that volume pressure is widespread, not an isolated regional phenomenon.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Real, not nominal. Organic growth (+4.3%) is the clean measure (excludes M&A and FX); reported growth (+5.8% FY2025, +7.8% TTM) is inflated by acquisitions and the currency effect from high-inflation markets.
• Growth engine. Almost entirely price (a defense against cocoa costs), with volume declining across all four regions — there is no organic volume engine today.
• Deceleration and cycle. The projected path decelerates from ~7% toward ~4% (the band for a consumer staple) as defensive pricing moderates.

• Relevant in 10 years (recurrence). Recurring, low unit-value snack consumption; the category persists, but brand loyalty increasingly competes with private label.
• Pricing power. The +8.0pp of price/mix offset cocoa costs in 2025, but generated −3.7pp of volume across all four regions — a sign of elasticity, not pure pricing power.
• Moat and its direction. Wide on brand and global scale, but moving in an eroding direction: retail consolidation + structural weakness in the biscuit category.
• Capital cycle. Cocoa cost (an input, not own capital) is the driver of the current cycle; the company guides partial moderation toward 2026, without quantifying the level it will reach.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net cash $0 bn
• ✓Interest coverage (EBIT / interest)14.3x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 100% of ROIC
• ✕Value creation (ROIC − 10% bar)-2pp
• !Malinvestment test (capex vs incremental ROIC)Strong investment mode 1.0x
• –Float / working capitalNeutral WC
• ✓Dilution (SBC % of revenue + shares)SBC 0.3% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Net debt ~$19.4bn, ~3.8x TTM EBITDA (depressed) — elevated for a consumer staple, though it should normalize toward ~2.5-3x as EBITDA recovers.
• Coverage and cash. TTM free cash flow (~$2.6bn) does not cover the dividend plus buyback combined (~$3.4bn) — the difference is funded with cash or debt.
• Interest coverage. EBIT/interest ~6x — adequate but tighter than the historical level due to margin compression.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Skin in the game. CEO and Chairman are the same person (Van de Put) since 2017-2018; the detail of insider ownership remains pending from the DEF 14A proxy (not processed in this extraction).
• Capital allocation. The dividend plus buyback combined (trailing) exceed real free cash flow; the buyback has already been sharply cut (from $2.4bn to $0.9bn) to protect the dividend.
• Integrity / normalization. The company discloses in detail in the 10-K notes the charges that distort GAAP (mark-to-market, pension settlement, impairment, ERP).

• GAAP and comparable earnings collapsed by half in FY2025 due to an input cost shock (cocoa) — today's P/E is calculated on that depressed earnings figure, without clearly distinguishing the commodity cycle from the underlying business.
• The buyback was sharply cut (from $2.4bn in FY2025 to $0.9bn trailing) to protect the dividend — a short-term cash stress signal that the market penalizes, even though the dividend itself kept growing.
• Structural fear (private label, shifting consumer preferences) overlaps with the cyclical cocoa shock, making it hard to distinguish how much of the decline is transitory and how much is permanent.

There is a genuine source of discount (the cyclical cocoa cost shock), but also real structural signals (the moat moving in an eroding direction, volume declining across all four regions) that are not merely market perception — the price does not offer an obvious bargain once both factors are weighed.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at ~0%/year (+2% total): the margin of safety protects the downside. The bull (+14%/year, +94% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Cocoa cost. The central disconfirming risk: if cocoa fails to moderate as the company guides, the margin stays structurally depressed and the entire base case is revised downward.
• Private label / retail consolidation. Large retailers gain bargaining power and develop private label — structural pressure on price and volume.
• Consumer preferences (health, GLP-1). The shift toward less sugary/processed products threatens the core chocolate and biscuit category, in parallel with other consumer staples.
• Geopolitics and tariffs. Exposure to Russia (3.7% of revenue) and Ukraine (0.4%), plus United States tariffs on inputs and finished products.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: wide moat, eroding.

• Peter Lynch Growth at a reasonable price (GARP)

  A stalwart growing 8% at a PEG of 2.9 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 6% (EBIT/EV) + ROIC 8% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts -1% vs our 8%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -4%/yr, bull-scenario ceiling +11%/yr over 5y: reasonable asymmetry, without an ample cushion.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, eroding; sources: intangibles, efficient scale, cost advantage → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -1%, within what we project (8%) — the story squares with the numbers.