Is MDLZ Worth Buying as Growth Improves but Valuation Stays Rich?

Mondelez International, Inc. MDLZ is showing better operating momentum as Emerging Markets remain firm and North America regains traction. That broadening growth base strengthens the case for improved sales performance through the rest of 2026.

The investment case is less clear at the current valuation. Europe and chocolate remain weak, costs are still pressuring profitability and earnings growth is modest, leaving investors to weigh better top-line momentum against limited room for execution misses.

MDLZ Growth Improves Across Key Markets

Second-quarter 2026 organic net revenues increased 2.2%, supported by 1.5 percentage points of pricing and 0.7 points of volume/mix. Positive contributions from both components suggest the quarter was not dependent on pricing alone.

Emerging Markets delivered 4.4% organic growth, with volume/mix adding 1.6 points. North America improved to 3.4% organic growth, including 1.2 points of volume/mix, giving MDLZ broader geographic support beyond its faster-growing emerging-market businesses. Management raised its 2026 organic net revenue growth outlook to at least 2%.

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Mondelez Still Faces Europe and Chocolate Weakness

Europe remains the clearest regional pressure point. Organic revenues declined 3.5% in the second quarter, while volume/mix fell 2.1 points. Management expects volumes to improve in the second half, but that recovery has yet to establish a consistent track record.

Chocolate also remains soft. Second-quarter chocolate volume/mix declined 1.6 points and organic revenue slipped 0.1%. Because chocolate represented 33% of Mondelez’s 2025 revenues, continued weakness in the category could remain a meaningful drag on the broader demand recovery.

MDLZ Margin Recovery Remains the Missing Piece

Improving sales have not yet translated into stronger operating earnings. Adjusted operating margin fell 120 basis points to 13.1% in the second quarter, while adjusted operating income declined 6.1% at constant currency even as adjusted gross profit increased 3%.

Adjusted earnings of 73 cents per share declined 2.7% at constant currency. Higher raw material costs, advertising and consumer promotion spending, other selling, general and administrative expenses, cocoa cost phasing and higher input costs tied to the Middle East conflict absorbed much of the benefit from pricing and productivity. Full-year adjusted EPS growth guidance remains flat to 5% at constant currency.

Mondelez Valuation Leaves Less Room for Error

MDLZ trades at 19.25X forward 12-month earnings, above 15.04X for its Zacks sub-industry and 16.98X for the Zacks Consumer Staples sector. The multiple is below its five-year median of 20.11X, but the premium to key benchmarks raises the execution bar.

The Hershey Company HSY, which describes itself as No. 1 in U.S. confection and No. 2 in U.S. snacking, is a relevant comparison for investors assessing chocolate and snacking exposure. General Mills, Inc. GIS, with more than 100 consumer brands and a portfolio that includes snacks, offers a broader packaged-food reference point.

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MDLZ Signals Favor Patience Over Chasing Growth

The bottom line is that MDLZ’s growth picture is improving, but the mix of European and chocolate weakness, margin pressure and a premium valuation makes patience more reasonable than chasing the recovery before earnings conversion becomes clearer.

The stock currently carries a Zacks Rank #3 (Hold). It also has a VGM Score of D, a Value Score of D, a Momentum Score of F and a Growth Score of C. Zacks Style Scores use A and B as the stronger grades, so the current mix points to weaker value and momentum characteristics, while growth sits closer to the middle of the scale. That combination supports a measured stance rather than an aggressive entry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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This article originally published on Zacks Investment Research (zacks.com).

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