Core Viewpoint - The Hershey Company is currently facing significant challenges, but these challenges may present a unique investment opportunity for long-term investors due to its historical performance and dividend reliability [1][5][11]. Company Overview - The Hershey Company (HSY) is a leading confectioner and snack maker, known for its chocolate products, including the Hershey brand and Reese's [2]. - The company has a history of growth through both organic means and acquisitions, recently expanding into salty snacks by acquiring companies like Dot's Pretzels [2]. Dividend Performance - Hershey has increased its dividend for 15 consecutive years, with an average annual increase of 10% over the past decade [3]. - The current dividend yield is approximately 3.2%, which is at the high end of its historical range, making it attractive for long-term dividend investors [4]. Current Challenges - Hershey's stock has lost over one-third of its value since its peak in 2023, primarily due to skyrocketing cocoa prices and projected declines in adjusted earnings of 30% to 40% by 2025 [5]. - The rise of new weight loss drugs may also reduce demand for sweets and snacks, adding to the company's challenges [6]. Positive Outlook - The Hershey Trust controls 79% of the voting rights and has a vested interest in maintaining a reliable and growing dividend, which may support conservative management practices [7]. - The company is expected to manage high cocoa prices by implementing price hikes and cutting costs, with the potential for market adjustments over time [8]. - Despite a 2% volume decline in 2024, there was a 6% increase in the final quarter, indicating resilience against the impact of weight loss drugs [9]. Investment Perspective - Investing in Hershey stock is seen as a contrarian play, requiring recognition of the company's challenges and belief in its ability to survive them [11]. - Successfully navigating cocoa price disruptions could lead to improved business fortunes and a higher valuation on Wall Street [12].

Group 1: PepsiCo - PepsiCo is currently facing slower growth in both revenue and earnings compared to the post-pandemic period, as it can no longer implement significant price increases [2][3] - For 2024, PepsiCo anticipates organic revenue growth of 2% and adjusted earnings growth of 9%, with similar expectations for 2025 [3] - Despite the slowdown, these growth figures are considered respectable within the consumer staples sector, which is known for steady growth [4] - PepsiCo offers a historically high dividend yield of 3.5%, supported by over 50 years of annual dividend increases, making it attractive for dividend investors [5][4] - The company is a major player in the beverage and snack industries, with a diversified portfolio and strong global distribution and marketing capabilities [6] - The recent share price pullback of approximately 20% presents a buying opportunity, especially if market conditions shift towards safer investments [6] Group 2: Hershey - Hershey is currently facing challenges due to rising cocoa prices and potential impacts from new weight loss drugs, leading to a stock decline of around 33% from recent highs [7] - The high cocoa prices are expected to stabilize over time as production adjusts, while Hershey plans to raise prices and manage costs in the interim [8] - Concerns regarding weight loss drugs may be overstated, as historical trends suggest consumers may not abandon chocolate, which remains a cost-effective indulgence [9] - Hershey's dividend yield has increased to about 3% due to the stock price drop, making it an attractive option for dividend investors [9] - The Hershey Trust, which holds 79% of the voting power, ensures that the company prioritizes reliable and growing dividends, allowing management to make long-term decisions without pressure [10] - The current high yield presents a potential opportunity for investors to establish a position in Hershey, especially if market conditions become turbulent [11] Group 3: Market Context - Both PepsiCo and Hershey have outperformed the S&P 500 index during a recent period of market uncertainty, indicating potential resilience [12] - The stocks of both companies remain below recent highs, and their historically high yields make them attractive for long-term dividend investors [13] - Investors are encouraged to act quickly, as the current opportunity may not last [13]

Industry Overview - The freeze-dried candy market is projected to grow from $1.36 billion to nearly $2.4 billion by 2030, indicating a significant upward trend in consumer interest and sales [1] - The hashtag freezedriedcandy has garnered over 4.7 billion views on TikTok, highlighting its popularity as a social media phenomenon [1] Company Insights - Jolly Rancher is introducing freeze-dried versions of its popular flavors, including Green Apple, Blue Raspberry, and Watermelon, utilizing advanced freeze-drying technology to enhance flavor and texture [2][3] - The new Jolly Rancher Freeze Dried product is marketed as a unique snacking experience, described as a "total flavor revolution" that offers an unexpected and playful way to enjoy the brand [3] - Jolly Rancher Freeze Dried is available in a 3.1oz pack at retailers nationwide, suggesting a strategic move to capture market share in the growing freeze-dried candy segment [3] Company Background - The Hershey Company, which owns Jolly Rancher, is a leading snacks company with over $11.2 billion in annual revenues and a diverse portfolio of brands, including Hershey's, Reese's, and Kit Kat [5] - Hershey has a long-standing commitment to corporate responsibility and community support, with initiatives focused on education and child welfare [6]

Group 1 - The Hershey Company has not been analyzed in detail since August 2016, indicating a significant gap in coverage for this chocolate giant [1] - The article suggests a focus on the investment potential of The Hershey Company, highlighting its relevance in the market [1] Group 2 - The content mentions a service that provides in-depth cash flow analyses and stock model accounts, which could be beneficial for investors interested in the oil and gas sector [2] - A promotional offer for a two-week free trial is available, aimed at attracting new subscribers to the investment service [3]

Core Insights - The Hershey Company is facing significant challenges, including high cocoa prices, weakening consumer demand, and increased competition, leading to a 6.1% decline in share price over the past six months [1][4][13] - The company's stock has underperformed compared to its industry, the broader Zacks Consumer Staples sector, and the S&P 500 during the same period [1] Group 1: Market Challenges - Hershey is navigating a difficult environment characterized by historically high cocoa prices and a financially strained consumer base, which is impacting its results [4] - There has been a shift in consumer behavior towards value-seeking, resulting in reduced foot traffic to convenience and drug stores where Hershey's products are prominently featured [4] - The company is losing market share in the core everyday chocolate category, which is concerning given its reliance on this segment [5] Group 2: Sales and Performance - Despite some improvement in product variety, sales in the convenience store segment remain weak due to macroeconomic pressures affecting consumer spending [6] - Hershey's 2025 guidance indicates a projected mid-30% decline in adjusted earnings per share (EPS) compared to 2024, with reported EPS expected to drop in the high-40% range [7] - Management anticipates gross margin pressure to intensify in the second half of 2025, potentially leading to a decline of more than 500 basis points [8] Group 3: Competitive Landscape - Competitive pressures are expected to escalate, particularly in Brazil and Mexico, where rivals are aggressively discounting and promoting their products [9] - The Zacks Consensus Estimate for EPS has seen downward revisions, with estimates for the current and next fiscal year decreasing [10] Group 4: Valuation and Investment Analysis - Hershey's forward 12-month price-to-earnings ratio is 30.12X, which is higher than the industry's ratio of 24.32X, indicating that investors may be paying a premium relative to expected earnings growth [12] - Given the significant challenges faced by Hershey, the company may carry heightened investment risk at this time, with a current Zacks Rank of 5 (Strong Sell) [13]

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].