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The Hershey Co HSY

Morningstar Rating
$207.04 −1.13 (0.54%)
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Company Report

Rampant Cocoa Cost Inflation Unlikely to Dull Wide-Moat Hershey's Financial Prospects or Edge

Consumers' hunger for confectionery and snacking fare has yet to be fulfilled, as evidenced by Hershey's outsize organic sales growth the past few years. But from where we sit, this isn't merely a byproduct of a favorable demand environment. Rather, we applaud the strategic focus CEO Michele Buck has brought to bear over the past seven years--ramping up investments in its core domestic brands while pulling back in its international arm (high-single-digit percentage of total sales, where we surmise its competitive position lags its global peers).

Price vs Fair Value

HSY is trading at a 111% premium.
Price
$207.04
Fair Value
$643.00
Uncertainty
Low
1-Star Price
$767.20
5-Star Price
$781.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Hershey has intentionally rationalized its fare over the past few years to ensure shelf space and advertising dollars are being allocated to the highest return opportunities.

Bears

Consternation abounds as it pertains to the financial health of the consumer, given the mounting pressure on pocketbooks, particularly for more indulgent and discretionary categories like confectionery and snacking.

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News

Trading Information

Previous Close Price
$208.17
Day Range
$206.40209.41
52-Week Range
$178.82267.25
Bid/Ask
$206.55 / $207.60
Market Cap
$41.87 Bil
Volume/Avg
1.2 Mil / 2.0 Mil

Key Statistics

Price/Earnings (Normalized)
21.46
Price/Sales
3.74
Dividend Yield (Trailing)
2.46%
Dividend Yield (Forward)
2.63%
Total Yield
3.71%

Company Profile

Hershey is a leading confectionery manufacturer in the us (around a $25 billion market), controlling around 36% of the domestic chocolate space (per Euromonitor). Beyond its namesake label, the firm's mix has expanded over the last 85 years and now consists of 100 brands, including Reese's, Kit Kat, Kisses, and Ice Breakers. Hershey's products are sold in about 80 countries, albeit with just a high-single-digit percentage of sales coming from markets outside the us, including Brazil, India, and Mexico. The firm has sought inorganic opportunities to extend its reach beyond its core confection business, adding Amplify Snack Brands and its Skinny Pop ready-to-eat popcorn to its mix, Pirate Brands, and Dot's Pretzels over the past few years.
Sector
Consumer Defensive
Industry
Confectioners
Stock Style Box
Mid Core
Total Number of Employees
20,505

Competitors

Valuation

Metric
HSY
MDLZ
CAG
Price/Earnings (Normalized)
21.4620.9511.47
Price/Book Value
10.253.361.60
Price/Sales
3.742.691.22
Price/Cash Flow
16.2017.807.96
Price/Earnings
HSY
MDLZ
CAG

Financial Strength

Metric
HSY
MDLZ
CAG
Quick Ratio
0.410.240.29
Current Ratio
0.970.770.95
Interest Coverage
14.3912.853.35
Quick Ratio
HSY
MDLZ
CAG

Profitability

Metric
HSY
MDLZ
CAG
Return on Assets (Normalized)
16.90%6.30%5.79%
Return on Equity (Normalized)
51.47%16.16%14.39%
Return on Invested Capital (Normalized)
23.23%9.83%8.83%
Return on Assets
HSY
MDLZ
CAG
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