Valued at a market cap of $41 billion, The Hershey Company (HSY) engages in the manufacturing and selling of confectionery products and pantry items. Based in Hershey, Pennsylvania, the company manufactures pantry items like baking ingredients, toppings and beverages, gum and mint refreshment products, snack bites and mixes, as well as spreads.
Companies valued at $10 billion or more are generally described as “large-cap” stocks, and Hershey fits this criterion perfectly. Hershey distinguishes itself as one of the largest chocolate manufacturers in the world and exports its products to approximately 80 countries worldwide. It owns various famous brands, including Hershey's, Reese's, Kit Kat, Jolly Rancher, and Ice Breakers.
Shares of HSY are trading 7.1% below their 52-week high of $213.85, recorded in September last year. The chocolate manufacturing company has gained 4.2% over the past three months, lagging behind the broader Consumer Staples Select Sector SPDR Fund’s (XLP) 7.9% return over the same time frame.
Moreover, in the long term, HSY stock is up 6.5% on a YTD basis, lagging behind XLP’s nearly 15% gain. Shares of HSY have declined 6.3% over the past 52 weeks, significantly underperforming XLP’s 15.5% return over the same time frame.
Yet, since late July, HSY has been trading above its 200-day and 50-day moving average, indicating a bullish trend.
Hershey has underperformed due to skyrocketing cocoa prices, which have more than tripled in three years due to poor crop conditions in Africa, and reduced consumer spending on discretionary items. However, despite missing Q2 revenues and earnings estimates on Aug. 1, the stock rose 1.1%, because investors were encouraged by the company’s plans to implement new pricing strategies and work with retail partners to address inflationary pressures. The stock also reacted positively to Hershey's efforts to cover expected inflation through pricing adjustments.
In the competitive arena of confectionery manufacturers, HSY has outpaced its rival, Mondelez International, Inc.’s (MDLZ) 2.7% gain on a YTD basis but has lagged behind MDLZ’s 4.2% return over the past 52 weeks.
As HSY has underperformed the broader sector, analysts remain cautious about its prospects. The stock has a consensus rating of “Hold” from the 21 analysts covering the stock, and the mean price target of $202.15 suggests only a 1.8% premium to its current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
