- Hershey anticipates a drop in full-year adjusted earnings per share (EPS) by 36% to 38%, with overall EPS growth estimated to fall around 50%.
- Despite EPS declines, the company expects net sales to rise by at least 2% for the fiscal year.
- Projected capital expenditure is between $425 million and $450 million, slightly lower than the $456.6 million estimate.
- In the second quarter, adjusted EPS was $1.21, a slight decrease from $1.27 the previous year, but surpassed the estimate of $1.01.
- Second-quarter net sales reached $2.61 billion, marking a 26% increase from the prior year and exceeding the estimate of $2.52 billion.
- North America confectionery net sales surged by 32% year-over-year to $2.09 billion, surpassing the $2 billion estimate.
- Salty snacks in North America saw an 8.8% annual sales increase to $315.5 million, above the projected $305.8 million.
- International net sales were $213.7 million, a rise of 4.4% year-over-year, but below the estimate of $228.2 million.
- Adjusted gross profit for the second quarter was $997.0 million, an 11% increase from last year, topping the estimate of $920.4 million.
- The adjusted gross margin for the quarter was 38.1%, lower than last year’s 43.2% but above the estimated 36.4%.
- Future guidance excludes potential impacts from the proposed acquisition of LesserEvil.
- The acquisition of Sour Strips is expected to contribute approximately a 40 basis point advantage to full-year net sales growth.
- Foreign currency exchange rates might negatively impact net sales growth by around 50 basis points this fiscal year.
- Interest expenses are expected to be around $200 million, driven by higher leverage and interest rates.
- Full-year other expenses are projected to be between $75 million and $80 million, mainly due to the write-down of tax-credit-qualifying equity investments.
- Expected full-year tariff costs range from $170 million to $180 million, influencing the earnings outlook.
- The company holds 3 buy ratings, 18 hold ratings, and 4 sell ratings from analysts.
Hershey Co/The on Smartkarma
Analyst coverage of Hershey Co/The on Smartkarma has been insightful, with Baptista Research providing in-depth research on the company’s recent performance and future prospects. In their report titled “The Hershey Company: Can The Management Generate Material Growth While Tackling Regulatory & Market Challenges?“, the analysts highlight Hershey’s operational agility in mitigating potential financial impacts from tariffs. The company anticipates tariff-related costs but has implemented strategies to minimize the impact, showcasing resilience amidst market challenges.
Furthermore, Baptista Research‘s report “The Hershey Co: Can Pricing Power and Innovation Keep Profits Sweet?” delves into Hershey’s response to factors like cocoa price volatility and market pressures. The analysts commend Hershey’s proactive approach in managing challenges by leveraging pricing power and innovation to sustain profitability. By strategically hedging against cocoa price fluctuations, Hershey demonstrates a commitment to ensuring sustainable growth and profitability in the face of market uncertainties.
A look at Hershey Co/The Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 4 | |
| Growth | 3 | |
| Resilience | 3 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 3.2 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Based on the Smartkarma Smart Scores, The Hershey Company seems to have a promising long-term outlook. With a strong score of 4 in Dividend and Momentum, this indicates that the company is performing well in terms of distributing profits to shareholders and has positive price performance. Additionally, with scores of 3 in Growth and Resilience, Hershey Co/The shows steady growth potential and the ability to withstand market challenges.
Although the Value score is lower at 2, suggesting that the stock may not be undervalued compared to its peers, the overall outlook for Hershey Co/The appears positive. As a major player in the chocolate and sugar confectionery industry, Hershey is known for its diverse product range including baking ingredients, toppings, and beverages, which adds to its strength and market presence.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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