What factors drive MDLZ's earnings surprises?

Mondelez International Inc.'s (MDLZ) recent earnings report revealed a slight earnings per share (EPS) shortfall, with the reported EPS of $0.65 missing the estimate by approximately 2.1%. However, the company's net revenue exceeded expectations, coming in at $9.6 billion, compared to the estimated $9.72 billion for the fiscal quarter ending December 31, 2024. **Cocoa Price Increases and Currency Fluctuations Pose Challenges**Mondelez faces significant headwinds from rising cocoa prices and adverse currency movements, which have impacted its gross profit margin and, consequently, its earnings. For instance, the company reported a 650-basis-point decline in its adjusted gross profit margin to 31.5% due to surging cocoa prices and higher transportation costs. **Organic Net Revenue Growth Outpaces Total Revenue Growth**While Mondelez's total revenue grew by 1.2% for the fiscal year 2024, its organic net revenue grew at a stronger rate of 4.3%, driven by higher net pricing. This indicates that the company's strategic initiatives to increase pricing and focus on core categories are paying off, despite the broader headwinds. **Geographical Exposure and Brand Strength Offer Resilience**Mondelez's diversified geographic presence and strong brand portfolio, including iconic brands like Oreo and Cadbury, have been key drivers of its performance. The company has seen improved market share performance and momentum in its chocolate portfolio, driven by stronger pricing growth. **Innovation and Marketing Investments Support Growth**Mondelez's continued investments in innovation, marketing, and distribution have been instrumental in maintaining consumer loyalty and driving market share gains. The company's focus on reshaping its portfolio and investing in its brands is expected to support sustained growth in the future. **Short-Term Challenges Cloud Long-Term Prospects**While Mondelez's long-term prospects remain strong, it faces short-term challenges that have impacted its stock performance and earnings outlook. The company's stock has underperformed the S&P 500 and the Consumer Staples Select Sector SPDR Fund over the past 52 weeks, primarily due to difficulties in keeping up with shifting consumer trends and heightened competition within the snack food sector. However, the company's average analyst price target suggests potential upside from the current levels, indicating investor confidence in its long-term prospects. In conclusion, Mondelez's earnings surprises are driven by a combination of factors, including cocoa price increases, currency fluctuations, organic net revenue growth, geographical exposure, brand strength, innovation, marketing investments, and short-term challenges.