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Is Mondelez Poised for Positive Earnings in 2013?

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  • Description

    Credit Suisse analyst Robert Moskow gives his outlook for Kraft and Mondelez stock.

  • Duration 3:20
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Well it is the big debut for mom believes international's -- splits off its snack food from its North American grocery food business.

Joining me now -- his outlook for the -- stock is Robert Moscow analyst with Credit Suisse.

Thanks much for joining us and you the company is poised for positive earning revisions and 2013 how come.

The model is that -- favorite I think both companies are poised for for positive revisions yeah in the case of -- delays.

Company's guiding to about a dollar fifty to a dollar 55.

But the balance sheets a little bit sloppy right now because at some excess cash.

And then there's some dis synergies.

That I think they can work through faster than people realize.

So I think there's probably about you know three or 4% easy upside there and then the currency has started to go their way as well I think -- -- set a very low.

Base for themselves so that in that in the event of some positive surprises they could drop some numbers to the bottom.

Line you know and other analysts was telling -- recently that this is one of those rare cases where it was better for both companies to break up do you think that's true.

I absolutely.

I think what we're seeing throughout the packaged goods universe is that focus tends to win over -- And Kraft had been trying to emphasize -- -- for many years they combine its snacks company with a a warehouse grocery company in both had very different routes to market they had different.

Geographic platforms.

And that I think you made a very wise decision.

Splitting up the -- -- that both can focus on what they what they can do to create value separately.

Although trying to find some weakness -- -- gum category developing markets has been a big drag on growth.

Is that cultural thing there are are we Americans big guns yours and not so much in developing countries.

Uh oh hi pat I think you chewing gum is extremely popular in the US but it tends to be cyclical.

I sometimes producers get ahead of themselves they introduce.

Price -- -- -- too high for the consumer to absorb.

Two dollar com is as a tough thing to to swallow when you're eighteen and -- unintended -- exactly and that and you don't have a job.

And so I I think both regularly and Cadbury -- are doing the right thing by introducing lower price points.

The innovation we'll swing the other way it's probably gonna -- -- a couple of quarters but.

That's a great category yet if he had one which of these two companies act better right now.

You know -- investors are asking that question and I think it really depends on on what here investment priorities are.

I think if you're looking for -- three to -- want to hear have to make money that's too easy.

So I didn't particularly for like two to three years out you would pick up -- believes its its its operating in emerging markets 44% of their sales.

It's it's got a great top line momentum behind day.

And I think it's picked -- on a long term basis it grows in the low teens -- but for the next couple years.

You know if you're looking for more safety.

The craft group has have very high dividend yield of four and a half percent I think -- have great visibility into cost savings I think the gross margin can go up.

250 basis points easily because of some low hanging fruit.

I think their earnings it is going to be very strong interest 12% EPS growth for a couple years for them to.

And then you decide from all right we got a job Robert -- Moscow great analysis thanks so much.

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