Hershey Company logged a -0.3% change during today's evening session, and is now trading at a price of $230.59 per share.
Over the last year, Hershey Company logged a 2.0% change, with its stock price reaching a high of $276.88 and a low of $211.49. Over the same period, the stock underperformed the S&P 500 index by -11.0%. As of April 2023, the company's 50-day average price was $251.78. The Hershey Company, together with its subsidiaries, engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. Based in Hershey, PA, the large-cap Consumer Staples company has 18,075 full time employees. Hershey Company has not offered a dividend during the last year.
Exceptional EPS Growth Obtained Primarily Through Share Buybacks:
| 2020-02-20 | 2021-02-17 | 2022-02-18 | 2023-02-17 | |
|---|---|---|---|---|
| Revenue (MM) | $7,986 | $8,150 | $8,971 | $10,419 |
| Gross Margins | 45.4% | 45.4% | 45.1% | 43.2% |
| Operating Margins | 21.5% | 22.2% | 22.8% | 21.7% |
| Net Margins | 14.4% | 15.69% | 16.47% | 15.79% |
| Net Income (MM) | $1,150 | $1,279 | $1,478 | $1,645 |
| Net Interest Expense (MM) | -$144 | -$149 | -$127 | -$138 |
| Depreciation & Amort. (MM) | -$292 | -$295 | -$315 | -$379 |
| Earnings Per Share | $2.12 | $2.37 | $3.54 | $8.25 |
| EPS Growth | n/a | 11.79% | 49.37% | 133.05% |
| Diluted Shares (MM) | 543 | 540 | 417 | 147 |
| Free Cash Flow (MM) | $2,082 | $2,141 | $2,579 | $2,847 |
| Capital Expenditures (MM) | -$318 | -$442 | -$496 | -$519 |
| Net Current Assets (MM) | -$4,278 | -$3,916 | -$5,409 | -$5,029 |
| Current Ratio | 1.05 | 1.57 | 0.9 | 0.8 |
| Long Term Debt (MM) | $3,531 | $4,090 | $4,087 | $3,344 |
| Net Debt / EBITDA | 2.79 | 2.3 | 2.93 | 2.29 |
Hershey Company benefits from growing revenues and increasing reinvestment in the business, strong margins with a stable trend, and a steady stream of strong cash flows. The company's financial statements show wider gross margins than its peer group and healthy leverage. However, the firm has exceptional EPS growth obtained primarily through share buybacks.
Hershey Company's Valuation Is in Line With Its Sector Averages:
Hershey Company has a trailing twelve month P/E ratio of 30.5, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $10.3, the company has a forward P/E ratio of 24.4. According to the 37.2% compound average growth rate of Hershey Company's historical and projected earnings per share, the company's PEG ratio is 0.82. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.0%. On this basis, the company's PEG ratio is 2.77. This suggests that these shares are overvalued. Furthermore, Hershey Company is likely overvalued compared to the book value of its equity, since its P/B ratio of 14.32 is higher than the sector average of 4.29. The company's shares are currently trading 500.6% above their Graham number. Ultimately, Hershey Company's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Analysts Give Hershey Company an Average Rating of Hold:
The 19 analysts following Hershey Company have set target prices ranging from $233.0 to $300.0 per share, for an average of $265.73 with a hold rating. As of April 2023, the company is trading -5.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Hershey Company has an average amount of shares sold short because 2.7% of the company's shares are sold short. Institutions own 82.2% of the company's shares, and the insider ownership rate stands at 0.19%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $3,391,901,829.
