Hershey logged a 1.7% change during today's afternoon session, and is now trading at a price of $195.72 per share.
Hershey returned losses of -29.8% last year, with its stock price reaching a high of $276.71 and a low of $178.82. Over the same period, the stock underperformed the S&P 500 index by -54.0%. AThe company's 50-day average price was $191.7. 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 18,650 full time employees. Hershey has offered a 2.3% dividend yield over the last 12 months.
Wider Gross Margins Than the Industry Average of 24.63%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $7,791 | $7,986 | $8,150 | $8,971 | $10,419 | $11,165 |
| Gross Margins | 46% | 45% | 45% | 45% | 43% | 45% |
| Net Margins | 15% | 14% | 16% | 16% | 16% | 17% |
| Net Income (M) | $1,178 | $1,150 | $1,279 | $1,478 | $1,645 | $1,862 |
| Net Interest Expense (M) | -$139 | -$144 | -$149 | -$127 | -$138 | -$152 |
| Depreciation & Amort. (M) | $295 | $292 | $295 | $315 | $379 | $420 |
| Diluted Shares (M) | 210 | 209 | 210 | 207 | 205 | 204 |
| Earnings Per Share | $1.6 | $5.46 | $6.11 | $7.11 | $7.96 | $9.06 |
| EPS Growth | n/a | 241.25% | 11.9% | 16.37% | 11.95% | 13.82% |
| Avg. Price | $90.45 | $124.09 | $134.99 | $163.47 | $206.36 | $195.61 |
| P/E Ratio | 56.53 | 22.73 | 22.09 | 22.99 | 25.92 | 21.59 |
| Free Cash Flow (M) | $1,271 | $1,446 | $1,258 | $1,587 | $1,808 | $1,552 |
| CAPEX (M) | $329 | $318 | $442 | $496 | $519 | $771 |
| EV / EBITDA | 11.31 | 15.69 | 15.26 | 15.95 | 17.42 | 14.63 |
| Total Debt (M) | $3,260 | $4,234 | $4,529 | $4,089 | $4,098 | $4,094 |
| Net Debt / EBITDA | 1.39 | 1.98 | 1.63 | 1.59 | 1.38 | 1.24 |
| Current Ratio | 0.93 | 1.05 | 1.57 | 0.9 | 0.8 | 0.97 |
Hershey benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and wider gross margins than its peer group. The company's financial statements show generally positive cash flows and healthy leverage levels. However, the firm has not enough current assets to cover current liabilities because its current ratio is 0.97.
Hershey's Valuation Is in Line With Its Sector Averages:
Hershey has a trailing twelve month P/E ratio of 21.1, compared to an average of 21.21 for the Consumer Staples sector. Based on its EPS guidance of $9.89, the company has a forward P/E ratio of 19.4. According to the 29.7% compound average growth rate of Hershey's historical and projected earnings per share, the company's PEG ratio is 0.71. 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 16.7%. On this basis, the company's PEG ratio is 1.27. This implies that the shares are fairly valued. In contrast, Hershey is likely overvalued compared to the book value of its equity, since its P/B ratio of 9.76 is higher than the sector average of 4.12. Ultimately, Hershey's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
There's an Analyst Consensus of Some Upside Potential for Hershey:
The 21 analysts following Hershey have set target prices ranging from $170.0 to $238.0 per share, for an average of $207.1 with a hold rating. The company is trading -5.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Hershey has an average amount of shares sold short because 3.0% of the company's shares are sold short. Institutions own 81.3% of the company's shares, and the insider ownership rate stands at 0.27%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $2,971,579,396.
