The Hershey Company (HSY), headquartered in Hershey, Pennsylvania, manufactures and sells confectionery products and pantry items. Valued at $37.1 billion by market cap, the company's principal products include chocolate and sugar confectionery products, gum and mint refreshment products, and pantry items, such as baking ingredients, toppings, and beverages.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and Hershey perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the confectioners industry. Hershey's strength lies in its strong brand portfolio, including popular names like Hershey's, Reese's, and Kit Kat. With a 45% share of the U.S. chocolate market, Hershey's dominant market position provides pricing power and competitive advantage.
Despite its notable strength, HSY slipped 15.9% from its 52-week high of $211.92, achieved on May 14. Over the past three months, HSY stock declined 11.3%, underperforming the S&P 500 Index’s ($SPX) 7.8% gains during the same time frame.
In the longer term, shares of HSY dipped 4.4% on a YTD basis and fell 1.9% over the past 52 weeks, underperforming SPX’s YTD gains of 27.3% and 28.7% returns over the last year.
To confirm the bearish trend, HSY has been trading below its 50-day and 200-day moving averages since late September, with some fluctuations.
HSY's struggles can be linked to the increase in cocoa prices and waning consumer interest in consumer staples. Additionally, concerns on Wall Street about the impact of new weight loss drugs on demand for sweets and snacks have added to the company's challenges.
On Nov. 7, HSY shares closed down more than 2% after reporting its Q3 results. Its adjusted EPS of $2.34 fell short of Wall Street expectations of $2.50. The company’s revenue was $3 billion, falling short of Wall Street forecasts of $3.1 billion. Hershey expects full-year adjusted EPS to be between $9 and $9.10.
HSY’s rival, Mondelez International, Inc. (MDLZ) shares lagged behind the stock, declining 15.1% on a YTD basis and 13% losses over the past 52 weeks.
Wall Street analysts are cautious on HSY’s prospects. The stock has a consensus “Hold” rating from the 22 analysts covering it, and the mean price target of $181.61 suggests an upside potential of 1.9% from current price levels.
