Core Viewpoint - The Hershey Company (NYSE: HSY) is currently rated as a HOLD, with the analyst waiting for the earnings hype to subside before considering a potential buy [1]. Group 1: Investment Strategy - The analyst identifies as a value dividend investor focused on long-term compounding [1]. - The approach involves investing in companies that are heavily undervalued with significant upside potential [1]. - The goal is to eventually live off dividends generated from long-term growth dividend companies [1].

Core Insights - The article discusses the expertise of Vladimir Dimitrov, CFA, who has a background in brand and intangible assets valuation, particularly in the technology, telecom, and banking sectors [1]. Group 1 - Vladimir Dimitrov has worked with some of the largest global brands during his career in London [1]. - He graduated from the London School of Economics and focuses on identifying reasonably priced businesses with sustainable long-term competitive advantages [1].

Core Insights - The Hershey Company has appointed Stacy Taffet as Chief Growth Officer, effective April 14, 2025, to drive transformative growth strategies across its expanding snacks portfolio [1][3] - Taffet brings 20 years of leadership experience, including 15 years in consumer-packaged goods, with a notable career at PepsiCo [1][2] - The appointment aligns with Hershey's commitment to accelerate growth and strengthen its position in the competitive global snacking market [3] Company Overview - The Hershey Company is an industry-leading snacks company with over 20,000 employees worldwide, generating more than $11.2 billion in annual revenues [5] - The company's portfolio includes iconic brands such as Hershey's, Reese's, Jolly Rancher, and Dot's Homestyle Pretzels, alongside popular salty snacks like SkinnyPop [5] - Hershey has a long-standing commitment to community impact, with a focus on education through initiatives like the Milton Hershey School [6]

Core Insights - The Hershey Company has appointed Tiffany Menyhart as Chief Customer Officer, effective March 17, 2025, to lead the U.S. Confection sales team [1][2] - Menyhart brings 30 years of sales and consumer packaged goods experience, with 15 years specifically in the confectionery sector, and has a strong track record in driving profitable growth and transforming retail partnerships [2][3] - The company aims to enhance its position as a leading snacking powerhouse under Menyhart's leadership, focusing on meeting the evolving needs of retail partners and consumers [2][3] Company Overview - The Hershey Company is recognized as an industry leader in snacks, generating over $11.2 billion in annual revenues from more than 90 brand names across approximately 80 countries [3] - The company employs over 20,000 individuals globally, committed to delivering high-quality products and maintaining ethical and sustainable operations [3][4] - Hershey has a long-standing commitment to social responsibility, including educational initiatives through the Milton Hershey School, established in 1909 [4]

Core Viewpoint - The Hershey Company recently reported strong Q4 2024 earnings, surpassing analyst expectations, but issued mixed guidance for 2025, leading to a stock rally despite concerns over future earnings and cocoa prices [1][4][5]. Financial Performance - Hershey's Q4 2024 EPS was $2.69, exceeding consensus estimates by $0.32, with revenues increasing 8.7% year-over-year to $2.89 billion, also above the expected $2.84 billion [4]. - Net income rose significantly by 130.6% year-over-year to $3.92 per diluted share, supported by a diverse product portfolio beyond chocolate [4]. Margin Expansion - Despite rising cocoa prices, Hershey managed to expand its gross margin by 1,170 basis points to 54% in Q4, aided by derivative gains, higher sales volume, and improved supply chain productivity [3]. - The adjusted gross margin increased by 60 basis points to 44.8%, while the operating profit margin rose by 1,500 basis points to 32.5% [3]. Cocoa Market Dynamics - Cocoa prices have reached all-time highs due to adverse weather conditions affecting production in West Africa, where two-thirds of the world's cocoa is sourced [2]. - China's investment in West Africa for cocoa processing is influencing global supply dynamics [2]. Future Guidance - For 2025, Hershey anticipates a significant EPS drop to between $6.00 and $6.18, compared to the consensus estimate of $7.33, while revenue is expected to grow at least 2% year-over-year to at least $11.43 billion [5]. - Adjusted EPS is projected to decline in the mid-30% range, indicating potential challenges ahead [5]. Stock Performance and Analyst Ratings - Hershey's stock has rebounded 12% from its recent lows, but analysts currently rate it as "Reduce," with a consensus price target of $164.15, which is 3.9% higher than current levels [8][10]. - The stock has a short interest of 3.39%, indicating some bearish sentiment among investors [8].

Core Viewpoint - The Hershey Company announced a public offering of $2 billion in notes with varying interest rates and maturities, intending to use the proceeds for debt repayment and general corporate purposes [1][2]. Group 1: Notes Offering Details - The company is offering $500 million of 4.550% notes due 2028, $500 million of 4.750% notes due 2030, $500 million of 4.950% notes due 2032, and $500 million of 5.100% notes due 2035 [1]. - The net proceeds will be used to repay all outstanding 0.900% Senior Notes and 3.200% Senior Notes, as well as certain short-term commercial paper borrowings, including accrued and unpaid interest [1]. Group 2: Regulatory and Contact Information - A registration statement for the Notes Offering has been filed with the U.S. Securities and Exchange Commission and is effective [2]. - Copies of the prospectus supplement and accompanying prospectus can be obtained from various financial institutions, including BofA Securities, Citigroup Global Markets, J.P. Morgan Securities, RBC Capital Markets, and U.S. Bancorp Investments [3]. Group 3: Company Overview - The Hershey Company is an industry-leading snacks company headquartered in Hershey, Pennsylvania, known for its iconic brands and commitment to ethical operations [4][5]. - The company employs over 20,000 people globally and offers more than 90 brand names in approximately 80 countries, including popular products like Hershey's, Reese's, and Kit Kat [4].

Group 1: DeepSeek Market Reaction - The release of a large language model by a Chinese hedge fund, DeepSeek, led to a one trillion dollar market crash, affecting companies like Taiwan Semiconductor and NVIDIA [3] - The market reaction was characterized as large and fueled by insufficient information, with many traders acting on incomplete understanding of the AI model's implications [3] - Lawmakers are considering banning DeepSeek on government devices, reflecting widespread corporate concerns about the application [4][5] Group 2: Hershey's Performance - Hershey reported a 9% increase in sales on a constant currency basis, with net income more than doubling, surprising analysts who expected a decline due to healthier eating trends [6][7] - The growth in sales of North American salty snacks was significant, with a 36% increase, attributed to acquisitions and improved distribution channels [7] - Hershey's ownership structure is unique, with the majority of voting stock controlled by the Milton Hershey School, which has different priorities than maximizing profits [8][9] Group 3: Eli Lilly's Growth - Eli Lilly reported a 45% year-over-year revenue growth, driven by the success of its weight loss drugs, positioning it alongside younger growth stocks [11] - The company's net income doubled to approximately $11.7 billion, up from $5.7 billion in 2023, indicating strong profitability [12] - Concerns exist regarding the sustainability of this growth, particularly with competition from other companies developing similar weight loss drugs [13][14] Group 4: Streaming Industry Challenges - The podcast discusses the challenges of producing television in the streaming era, highlighting a shift towards creating content primarily for marketing rather than for viewer engagement [18][19] - Executives in the streaming industry prioritize recognizable intellectual property and star power over artistic quality, leading to a less favorable environment for creative storytelling [20] - The current landscape is described as increasingly antagonistic towards artistic endeavors, with a focus on generating subscriptions rather than producing compelling content [20][24]

Core Viewpoint - The Hershey Company is conducting a public offering of notes to repay existing debt and for general corporate purposes [1][2]. Group 1: Notes Offering Details - The net proceeds from the Notes Offering will be used to repay all outstanding 0.900% Senior Notes due 2025 and 3.200% Senior Notes due 2025, as well as certain short-term commercial paper borrowings, including accrued and unpaid interest [1]. - A registration statement for the Notes Offering has been filed with the U.S. Securities and Exchange Commission and is effective [2]. Group 2: Company Overview - The Hershey Company is headquartered in Hershey, Pennsylvania, and is recognized as an industry-leading snacks company with over 20,000 employees globally [4]. - The company offers more than 90 brand names in approximately 80 countries, including popular products like Hershey's, Reese's, and Kit Kat [4]. - Hershey has a long-standing commitment to ethical operations and community support, exemplified by the establishment of the Milton Hershey School in 1909 [5].

Financial Performance - For the year ended December 31, 2024, net sales were $11,202.3 million, reflecting a slight increase of 0.3% compared to $11,165.0 million in 2023, primarily due to a favorable price realization of approximately 3%[140]. - Gross profit for 2024 was $5,300.9 million, representing a 6.1% increase from $4,997.8 million in 2023, with a gross margin of 47.3%, up from 44.8% in the previous year[139][146]. - Operating profit increased to $2,898.2 million in 2024, a 13.2% rise from $2,560.9 million in 2023, with an operating profit margin of 25.9%[153]. - Net income for 2024 was $2,221.2 million, a significant increase of 19.3% compared to $1,861.8 million in 2023, with diluted net income per share rising to $10.92 from $9.06[139]. - Selling, marketing, and administrative expenses decreased by 2.6% to $2,373.6 million in 2024, driven by lower corporate expenses and a decline in advertising costs[149]. - Cost of sales decreased to $5,901.4 million in 2024, down 4.3% from $6,167.2 million in 2023, influenced by favorable costs from commodity derivative instruments[145]. - The effective income tax rate decreased to 10.2% in 2024 from 14.3% in 2023, contributing to the increase in net income[139]. - Earnings Per Share (EPS) diluted rose to $10.92 in 2024, up $1.86, or 20.5%, from $9.06 in 2023[160]. Segment Performance - North America Confectionery segment net sales were $9,118.6 million in 2024, a slight decrease of $4.5 million from $9,123.1 million in 2023, driven by a 4% volume decline[168]. - North America Salty Snacks segment net sales increased to $1,135.7 million in 2024, up $43.0 million, or 3.9%, from $1,092.7 million in 2023[176]. - Segment income for North America Confectionery was $2,945.7 million in 2024, a decrease of $171.3 million, or 5.5%, compared to $3,117.0 million in 2023[170]. - North America Salty Snacks segment income increased to $199.4 million in 2024, up $41.1 million, or 26.0%, from $158.3 million in 2023[177]. - International segment net sales were $948.0 million in 2024, a slight decrease of 0.1% from $949.2 million in 2023, primarily due to unfavorable foreign currency exchange rates and volume decrease[182]. - Segment income for the International segment dropped to $111.5 million in 2024, a decrease of 24.8% from $148.3 million in 2023, mainly due to higher commodity costs and unfavorable foreign currency exchange rates[183]. Cash Flow and Capital Expenditures - Cash flow from operating activities increased to $2.5 billion in 2024, up by $208.4 million compared to $2.3 billion in 2023, driven by improvements in working capital management[193]. - Investing activities used cash of $960.3 million in 2024, a decrease from $1.2 billion in 2023, reflecting reduced investments in capabilities and technology[197]. - Financing activities used cash of $1.3 billion in 2024, compared to $1.1 billion in 2023, primarily for stock repurchases and dividend payments[198]. - Capital expenditures were $605.9 million in 2024, down from $771.1 million in 2023, as key strategic initiatives were completed[199]. - The company expects capital expenditures in 2025 to be approximately $425 million to $450 million, returning to historical levels[199]. Shareholder Returns - Total dividend payments increased to $1,084.8 million in 2024, up from $889.1 million in 2023, with dividends per share of Common Stock rising 23.0% to $5.480[200]. - Share repurchases totaled $494.2 million in 2024, including $400.0 million under pre-approved programs and $94.2 million to offset stock options[201]. Debt and Liquidity - Total short- and long-term debt increased to $5.1 billion in 2024, primarily due to a $587 million rise in short-term debt[205]. - The company maintains a $1.35 billion unsecured revolving credit facility, with $204 million of available capacity as of December 31, 2024[206]. - Future material cash requirements total $8,541.7 million, with $3,227.5 million due within one year[214]. - Approximately 80% of cash and cash equivalents were held by subsidiaries outside the U.S., with plans to reinvest earnings to avoid material tax implications[204]. Tax and Pension - The company maintains reserves for uncertain tax positions, reflecting the most likely outcome of tax audits and assessments[239]. - The company applies a more-likely-than-not threshold for recognizing uncertain tax positions, impacting income in the quarter of any changes[239]. - The expected long-term rate of return on pension plan assets was increased to 6.8% for 2024 from 6.7% in 2023, aligning with the historical average return of approximately 6.8% over the past 20 years[228]. - Cumulative unrecognized investment and actuarial losses for pension plans amounted to approximately $165 million as of December 31, 2024, which may increase future pension expenses if not offset by favorable investment returns or other factors[229]. - Pension expense for defined benefit pension plans is projected to be approximately $13 million in 2025, with future expenses dependent on investment performance and other variables[230]. Corporate Governance - The Hershey Trust Company maintains voting control over the company, influencing business decisions through its representatives on the Board[212].

Core Insights - The Hershey Company is reaffirming its full-year 2025 financial expectations for net sales and earnings per share, indicating a focus on maintaining growth despite market challenges [2] Financial Outlook - The company anticipates at least 2% growth in net sales for 2025 [2] - Reported earnings per share are expected to decline in the high-40% range [2] - Adjusted earnings per share are projected to decline in the mid-30% range [2] - The acquisition of Sour Strips is expected to contribute approximately 30 basis points to net sales growth for the full year [2] - Foreign currency exchange rates are anticipated to have a 30 basis point headwind on net sales growth for 2025 [2] Strategic Initiatives - The company is focusing on growth strategies and enhancing commercial capabilities to optimize its operating model and deliver long-term shareholder value [1]