We are familiar with stocks who have been winners and losers in the aftermath of the COVID-19 pandemic, with the Mondelez share price a stand out on the recovery side. Many investors have run for cover and dumped stocks in travel and hospitality whose earnings have dived in the wake of COVID-19, or whose revenues remain under a cloud of uncertainty. Perhaps the easiest way for many has been to gravity towards the clear winners, those stocks exposed to online retail, technology and hard assets such as precious metals. But there may be a class of stock like Mondelez shares who, by definition, are relatively consistent and immune to the vagaries of consumer spending power or disposable income.
Mondelez shares safe from headwinds
Snacks group Mondelez would appear to fit the bill in terms of being safe from the headwinds of the pandemic, a point underlined by the recovery in the Mondelez share price since March. This is based as much in terms of consistency of earnings, and the way they have held up against the ups and downs of the economic cycle.
Given that with the Oreo to Cadburys group we are looking at low ticket items where consumer discretion and impulse buying can exist even when incomes are being squeezed and many are in a work from home environment, one can assume with Mondelez shares the earnings visibility is more transparent than most.
MDLZ shares: earnings strength
However, with a company like Mondelez we are looking at the opposite of disruption, whether by lockdown, or competition. Here it is earnings strength and consistency born of the portfolio of brands and products, from Cadbury’s Crème Eggs, to Cote D’or to Oreos.
This has made it a beacon of revenues over the past year, something which has been illustrated well by the way that Q3 2020 revenues of $6.67bn were so close to $6.36bn for the same time last year. Given that between these two announcements occurred one of the most disruptive events of recent times – the arrival COVID-19, one has to marvel at how the performance of the Mondelez has remained so reliable, if only looking at the supply chain issues the pandemic has brought. Adding in the different timings of lockdown measures and economic considerations, and from an investment perspective it can be said that Mondelez shares are hard-wired to perform.
Mondelez shares: 3% top line growth
But while the Mondelez share price has so far proven itself as a steady pair of hands through turmoil, we should be aware that the market is forward looking and would be keen to know that the consistency can be maintained. This is particularly so given the way that doubters. They may be soothed by current estimates that the EPS will rise from Q3’s $0.63 to $0.67, and revenues stretch up to $7.13bn.
Perhaps most important of all is that the company itself has said it can sustain 3% top line growth going into 2021. Given the reliability of earnings through 2020, it is likely that most observers of the snack food giant would go with this prediction.
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DLZ share price daily chart uptrend