Mondelez focuses its business on the BRIC regions (Brazil, Russia, India and China). The company has experienced a 9.3% year-over-year growth in revenue in the first quarter 2013, with double-digit growth in three important and heavily populated markets: India, China and Brazil. For the full year 2013, the company expected an organic revenue increase of 5%-7%, with the operating EPS of $1.55 to $1.60 per share. Mondelez International Inc (NASDAQ:MDLZ), at $29.50 per share, has a total market cap of $52.60 billion. The market values Mondelez at as high as 13.85 times EV/EBITDA and 19 times its forward earnings.
PepsiCo with its profitable Frito-Lay
Nelson Peltz has recently shown his interest in Mondelez International Inc (NASDAQ:MDLZ), as well as the world’s second biggest soft drink maker, PepsiCo, Inc. (NYSE:PEP), by investing around $2.7 billion in both companies. Many investors speculate that he might want Pepsi’s Frito Lay business to be spun off and merged with Mondelez. Frito-Lay North America is Pepsi’s biggest operating profit contributor, generating nearly $3.65 billion in profit in 2012, while PepsiCo Americas Beverages ranked second with nearly $2.94 billion in operating profit. If Frito-Lay was to be merged with Mondelez International Inc (NASDAQ:MDLZ), the combined company could be the most dominating food business in the world. With the operating profit of $3.65 billion, a simple 20 P/E would value Frito-Lay at as much as $73 billion. PepsiCo, Inc. (NYSE:PEP) is trading at $80.80 per share, with a total market cap of $125 billion. The market values PepsiCo, Inc. (NYSE:PEP) at around 12.5 times EV/EBITDA and 20.7 times its forward earnings.
My Foolish take
As those consumer goods giants are operating under conglomerate structure, a lot of value could be unlocked via a spinoff and business restructuring. With the global leading positions in the global food industry, all three companies mentioned above could fit well in the long-term portfolios of patient investors.
Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends PepsiCo, Inc. (NYSE:PEP). The Motley Fool owns shares of PepsiCo.
The article Three Big F&B Giants for Your Long Term Portfolio originally appeared on Fool.com.
Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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