Mondelēz's Q2 Earnings Slump Hides a Snack Stock Bargain – Here's Why to Buy the Dip

The snack food giant Mondelēz International (MDLZ) faces a tough Q2 2025 earnings report, with analysts predicting a 22% plunge in EPS to $0.67. But here's the deal: this slump isn't the end of the story. Beneath the headline numbers, there's a resilient business model, organic growth, and a valuation discount that could make this a prime buying opportunity. Let's dig in.

The Headwinds Are Real, But Manageable

The expected Q2 EPS drop stems from familiar culprits: currency headwinds, supply chain costs, and the expiration of a temporary distributor deal for its former gum business. These are temporary drags, not existential threats. Management has already signaled cost-cutting measures, pricing power, and innovation to offset these pressures.

Take a look at the organic revenue growth: it surged 3.1% in Q1 despite flat top-line results. That's the power of brands like Oreo, Cadbury, and Clif Bar. These aren't just snacks—they're cultural staples with global demand. Even in a slowing economy, people don't stop snacking.

Why the Stock Is a Bargain Right Now

Despite the Q2 slump, Mondelēz's stock has underperformed the market by a mile. Over the past year, shares are up just 2.8%, while the S&P 500 is up 11.9%. This disconnect creates a valuation gap.

Here's what's undervalued:
- Analyst forecasts for a 2026 rebound: EPS is expected to jump 10% to $3.33, erasing this year's declines.
- Strong free cash flow: The company's 10.3% FCF margin gives it flexibility to buy back shares or boost its 4.4% dividend yield.
- Manageable debt: A debt/EBITDA ratio of 2.45x in 2025 keeps leverage in check, even as it invests in growth.

The Bull Case: Buy the Dip, Own the Brands

This isn't a “growth at all costs” story—it's a cash-cow story. Mondelēz's brands dominate shelves in 150+ countries, and its focus on innovation (think single-serve Cadbury treats or Oreo Cakesters) keeps demand steady. Even in tough quarters, the company has beaten EPS estimates three of the last four times, proving its ability to outperform expectations.

The mean price target of $72.12 implies a 5% upside from current levels—a modest gain, but paired with a dividend, this becomes a defensive income play with long-term growth potential.

The Risk? Don't Get Bullish Too Soon

The skeptics are right to worry: currency swings (especially in Europe and Latin America) and rising input costs could prolong the earnings slump. If Q2's net income comes in below $895 million (the $0.67 EPS estimate), shares could drop further. But here's the key: this isn't a “sell” scenario—it's a “wait for clarity” moment.

Bottom Line: A Snack Stock for the Long Haul

Mondelēz's Q2 earnings will hurt in the short term, but its brand dominance, dividend resilience, and 2026 turnaround potential make it a contrarian buy. If you can stomach a bit of volatility, this is a stock to accumulate on dips.

Investment Advice:
- Buy: If the stock drops below $65 post-earnings (a 10% discount to the mean target).
- Hold: For those already in, ride the dividend and wait for the 2026 rebound.
- Avoid: Only if you're purely chasing short-term gains—this is a slow-and-steady name.

In the snack game, Mondelēz doesn't just survive—it wins. This Q2 stumble is a speed bump, not a roadblock.