Stock Analysis on Net
Stock Analysis on Net

Mondelēz International Inc. (NASDAQ:MDLZ)

Present Value of Free Cash Flow to Equity (FCFE)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Mondelēz International Inc., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 10.06%
01 FCFE0 2,297
1 FCFE1 2,456 = 2,297 × (1 + 6.94%) 2,232
2 FCFE2 2,627 = 2,456 × (1 + 6.95%) 2,169
3 FCFE3 2,810 = 2,627 × (1 + 6.97%) 2,108
4 FCFE4 3,007 = 2,810 × (1 + 6.99%) 2,049
5 FCFE5 3,217 = 3,007 × (1 + 7.00%) 1,992
5 Terminal value (TV5) 112,630 = 3,217 × (1 + 7.00%) ÷ (10.06% – 7.00%) 69,753
Intrinsic value of Mondelēz International Inc. common stock 80,304
 
Intrinsic value of Mondelēz International Inc. common stock (per share) $62.08
Current share price $62.17

Based on: 10-K (reporting date: 2024-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.78%
Expected rate of return on market portfolio2 E(RM) 14.43%
Systematic risk of Mondelēz International Inc. common stock βMDLZ 0.55
 
Required rate of return on Mondelēz International Inc. common stock3 rMDLZ 10.06%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rMDLZ = RF + βMDLZ [E(RM) – RF]
= 4.78% + 0.55 [14.43% – 4.78%]
= 10.06%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Mondelēz International Inc., PRAT model

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Average Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Cash dividends declared 2,397 2,209 2,025 1,867 1,718
Net earnings attributable to Mondelēz International 4,611 4,959 2,717 4,300 3,555
Net revenues 36,441 36,016 31,496 28,720 26,581
Total assets 68,497 71,391 71,161 67,092 67,810
Total Mondelēz International shareholders’ equity 26,932 28,332 26,883 28,269 27,578
Financial Ratios
Retention rate1 0.48 0.55 0.25 0.57 0.52
Profit margin2 12.65% 13.77% 8.63% 14.97% 13.37%
Asset turnover3 0.53 0.50 0.44 0.43 0.39
Financial leverage4 2.54 2.52 2.65 2.37 2.46
Averages
Retention rate 0.47
Profit margin 12.68%
Asset turnover 0.46
Financial leverage 2.51
 
FCFE growth rate (g)5 6.94%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 Retention rate = (Net earnings attributable to Mondelēz International – Cash dividends declared) ÷ Net earnings attributable to Mondelēz International
= (4,611 – 2,397) ÷ 4,611
= 0.48

2 Profit margin = 100 × Net earnings attributable to Mondelēz International ÷ Net revenues
= 100 × 4,611 ÷ 36,441
= 12.65%

3 Asset turnover = Net revenues ÷ Total assets
= 36,441 ÷ 68,497
= 0.53

4 Financial leverage = Total assets ÷ Total Mondelēz International shareholders’ equity
= 68,497 ÷ 26,932
= 2.54

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.47 × 12.68% × 0.46 × 2.51
= 6.94%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (80,418 × 10.06% – 2,297) ÷ (80,418 + 2,297)
= 7.00%

where:
Equity market value0 = current market value of Mondelēz International Inc. common stock (US$ in millions)
FCFE0 = the last year Mondelēz International Inc. free cash flow to equity (US$ in millions)
r = required rate of return on Mondelēz International Inc. common stock

FCFE growth rate (g) forecast

Mondelēz International Inc., H-model

Microsoft Excel
Year Value gt
1 g1 6.94%
2 g2 6.95%
3 g3 6.97%
4 g4 6.99%
5 and thereafter g5 7.00%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 6.94% + (7.00% – 6.94%) × (2 – 1) ÷ (5 – 1)
= 6.95%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 6.94% + (7.00% – 6.94%) × (3 – 1) ÷ (5 – 1)
= 6.97%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 6.94% + (7.00% – 6.94%) × (4 – 1) ÷ (5 – 1)
= 6.99%