Nevertheless, Mondelez is positioned to equal PepsiCo’s dominance if it can keep from making additional capital allocation mistakes. For instance, it paid way too much to acquire Cadbury and sold its frozen pizza business to Nestle at a bargain price. The smartest thing Mondelez could do is merge with PepsiCo, Inc. (NYSE:PEP), but it should be able to compete in international markets if it just keeps promoting its brands.
Mondelez International Inc (NASDAQ:MDLZ) is a great company, so it does not come at a cheap price. Management has guided to $1.56 earnings per share in 2013, so it trades at about 20x earnings. However, the company should easily be able to grow into that valuation through organic sales growth — something that has been hard to come by in recent years but is expected to pick up again soon. In that case, investors can expect a better-than-market return from Mondelez going forward.
The article This Company Seeks to Dominate Snacks originally appeared on Fool.com and is written by Ted Cooper.
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