Home Forex Hershey: Better Prospects? | HF analysis

Hershey: Better Prospects? | HF analysis

by SuperiorInvest

The Hershey Company is best known as one of the largest chocolate conglomerates in the world, founded in 1894 by Milton S. Hershey. The chocolate candies under the company include Hershey’s Kisses, Reese’s, Kit Kat, Whoppers, Cadbury, etc. In addition, the company also manufactures and sells a wide range of products, including baking products (chips, baking bars), snacks (Skinny Pop Popcorn, Paqui chips, ONE protein bar, Lily’s unprocessed candy, etc.) and syrups, spreads and toppings. On top of all that, the company also built HersheyPark, which offers tons of fun (and comes with tons of perks like free breakfast and park passes, resort benefits, extra cash bonuses, etc.) for tourists and local visitors, including water. park attractions, ZooAmerica and Hershey’s Chocolatetown. All of this has made Hershey the successful company it is today.

Hershey has manufacturing facilities both locally in the US and overseas, specifically in Brazil, Mexico, Canada, India and Malaysia. She recently announced that the company is going to to expand its Mexican plant where production is expected to increase by 25%. Historically, the company has proven resistant growth even in the midst of major crises, from the 1918 flu pandemic, the Great Depression, two world wars and the recent Covid-19 pandemic and economic recession. Taking Covid-19 as an example, a studies showed that more and more people tend to buy comfort food, such as chocolate and candy, as an escape from increased stress levels during a stressful period.

Fig.1: Hershey Company Worldwide Net Sales (in US billions), 2006-2021. Source: Extra.

Management expressed concern about its sales in the initial phase of the pandemic outbreak, but statistics proved them wrong. As Figure 1 shows, the company’s net sales have plummeted 8 billion dollars by the end 2020and still increased almost 9 billion dollars in 2021. Its net profit for the year was 1.478 billion dollarsup 15.55% from 2020.

Fig.2: Reported sales versus analyst forecast for Hershey. Source: money.cnn

The Hershey Company made a big jump in 2021 in both revenue and earnings per share (EPS). Its annual sales increased last year +11.11% from the previous year and +15.38% three years ago. Coming into 2022, the company continued to make better progress, with sales growing in Q1 and Q2 2.7 billion dollars and 2.4 billion dollarsboth higher than consensus estimates.

Giant. 3: Reported EPS vs Analyst Forecast for Hershey. Source: money.cnn

Its EPS is generally in line with market expectations. In 2021, the company’s EPS stood at $7.19up +14.31% from the previous year and +34.14% three years ago. In 2022, it achieved EPS for both Q1 and Q2 $2.53 and $1.80 in that order, it also beat analysts’ expectations.

The company is to announce it Q3 financial results on 27Thursday October. The general forecast for sales and EPS they are 2.6 billion dollars and $2.10, respectively. Sentiment remains upbeat. His strategy effectiveness in product marketing, price, placement, and distribution, as well as promotion and advertising, play a major role in improving Hershey’s global competitiveness as well as achieving its goals and vision.

Fig.4: Comparison of Hershey, Its Industry and the S&P500. Source: Zacks

According to Zacks’ findings, Hershey has done a better job in its financials compared to its industry. This year, its growth rate has reached 14.35%, which is higher than its industry (11.70%) and the S&P 500 (8.62%). Based on this result, Zacks ranks the company at #2 (Buy).

Technical analysis:

#Hershey (ŘL.s) share price has traded in a strong bullish trend since gaining support in May 2018, with the lowest print remaining at $89.01. To date, the total gains are over 150%. After Q1/2022, the company’s share price was consolidated in a range. The lowest level reached 19Thursday May, in $201.30before rebounding to a peak of 24Thursday August in $234.44. This price together with $231.90 it forms the nearest resistance zone, behind which it follows $241.40 and 254 dollars. You can find the nearest support at 221 dollars. A break of this level could mean that the bears will continue to test minor support at $231.50then the lows of the consolidated zone at $201.30.

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Larince Zhang

Disclaimer: This material is provided as general marketing communication for informational purposes only and does not constitute independent investment research. Nothing in this communication contains or should be considered to contain investment advice or an investment recommendation or a solicitation to buy or sell any financial instrument. All information provided is collected from reputable sources and any information containing an indication of past performance is not a guarantee or a reliable indicator of future performance. Users acknowledge that any investment in leveraged products is characterized by a degree of uncertainty and that any investment of this nature involves a high level of risk for which users are solely responsible and liable. We shall not be liable for any loss arising from any investment made based on the information provided in this communication. This communication may not be reproduced or redistributed without our prior written consent.

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