Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 31 Jul, 25 | HSY | Buy | USD 188.83 | USD 198.0 | USD 207.0 | 91 days | Closed |
13.63%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
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. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products; gum and mint refreshment products, including mints, chewing gums, and bubble gums; pantry items, such as baking ingredients, toppings, beverages, and sundae syrups; and snack items comprising spreads, bars, snack bites, mixes, popcorn, and pretzels. The company provides its products primarily under the Hershey's, Reese's, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily's, SkinnyPop, Pirates Booty, Paqui, Dot's Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands. It markets and sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company was founded in 1894 and is headquartered in Hershey, Pennsylvania.
Salty Snacks Segment Margin Expansion: In Q2 FY2025, the North America Salty Snacks segment margin expanded by 310 basis points to 21.1%, compared to 17.0% in Q2 FY2024, driven by sales growth, supply chain productivity, and transformation program savings
Net Sales Growth: For the Q2 FY2025, Hershey reported net sales of USD 2,614.7 million, an increase of 26.0% compared to USD 2,074.4 million in Q2 FY2024
Gross Margin Contraction: The reported gross margin in Q2 FY2025 declined by 970 basis points, dropping to 30.5% from 40.2% in Q2 FY2024, driven by higher input costs, unfavorable mix, and derivative losses
Reported Net Income Decline: In Q2 FY2025, reported net income fell by 65.2% to USD 62.7 million, compared to USD 180.1 million in Q2 FY2024, primarily due to increased commodity costs and mark-to-market derivative losses
Hershey faces significant investment risk from sustained commodity price volatility, particularly in cocoa, and escalating tariff costs, which threaten profit margins despite top-line resilience
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 188.83 | 166.0 | 198.0 | 207.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Strong Revenue Growth Driven by Seasonal Timing and Recovery Effects: The Hershey Company reported consolidated net sales of USD 2.61 billion for Q2 FY2025, reflecting a 26.0% year-over-year increase, with organic constant currency growth at 26.3%. This growth was primarily due to favorable volume shifts, including the timing of Easter, the lap of planned inventory reductions following the prior year’s ERP system implementation, and early shipments for the Halloween season. Volume contributed approximately 21 percentage points, while pricing added around 5 points to growth. Notably, the North America Confectionery segment led this surge with a 32.0% increase in reported sales.
Earnings and Margins Pressured by Inflation and Commodity Costs: Despite robust sales, reported net income dropped by 65.2% to USD 62.7 million, or USD 0.31 per diluted share, due to heightened input costs and derivative losses. Adjusted EPS declined 4.7% year-over-year to USD 1.21. Gross margin contracted by 970 basis points to 30.5% on a reported basis, largely due to higher commodity and manufacturing costs, unfavorable sales mix, and mark-to-market losses. On an adjusted basis, gross margin fell by 510 basis points to 38.1%, while adjusted operating profit margin contracted by 280 basis points to 15.7%.
Segment-Wise Performance Highlights Strength in Confectionery and Salty Snacks: The North America Confectionery segment saw net sales rise to USD 2.09 billion, up 32.0%, with volume growth contributing 25 points. Retail takeaway in the CMG category grew 21.8%, while market share rose 90 basis points. The Salty Snacks segment delivered 8.8% growth, reaching USD 315.5 million in revenue, supported by strong performances from Dot’s Pretzels and SkinnyPop. Segment margin for Salty Snacks improved by 310 basis points to 21.1%, driven by sales leverage and supply chain productivity gains. Conversely, the International segment's net sales rose only 4.4% and its segment margin fell 290 basis points to 9.3%, primarily due to macroeconomic and regulatory headwinds in Mexico.
Updated FY2025 Outlook Reflects Tariff Impact and Cost Management Efforts: The company revised its 2025 adjusted EPS guidance downward to USD 5.81–USD 6.00, representing a 36%–38% decline from 2024, citing higher-than-expected tariff expenses of USD 170–USD 180 million and continued input cost pressures. Reported EPS is expected to decline approximately 50% year-over-year. Nonetheless, net sales growth is expected to remain at least 2%, supported in part by the Sour Strips acquisition, which is projected to contribute 40 basis points. Hershey is also implementing aggressive mitigation strategies, including USD 150 million in cost savings through its agility and automation initiatives.
Tax and Investment Impacts Contribute to Earnings Volatility: Hershey’s reported effective tax rate surged to 57.9%, up 3,150 basis points, due to foreign rate differentials and increased non-U.S. tax reserves. Adjusted effective tax rate also rose to 32.8%, reflecting a similar trend. Additionally, other expense increased to USD 75–USD 80 million, largely due to write-downs of equity investments. Interest expense is expected to hit USD 200 million for the full year amid higher leverage, further straining bottom-line performance.
Ongoing Investments and Strategic Positioning: While short-term pressures are evident, Hershey continues to invest in brand innovation and productivity. Advertising and marketing expenses surged 35.5% year-over-year in Q2 FY2025, aimed at sustaining momentum across both seasonal and non-seasonal categories. The company is progressing on its digital transformation and automation journey, which is projected to deliver growing operational efficiencies. These initiatives are designed to enhance long-term competitiveness while navigating current cost headwinds.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on The Hershey Company (NYSE: HSY) at the closing market price of USD 188.83, as on July 30, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Defensive Industry: Confectioners
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| HSY Hershey Co |
3.52 1.78% | 201.53 | 19.64 | 17.79 | 3.33 | 9.37 | 3.76 | 15.10 |
| MDLZ Mondelez International Inc |
0.90 1.53% | 59.59 | 21.73 | 18.90 | 2.49 | 3.17 | 2.99 | 14.11 |
| LDSVF Chocoladefabriken Lindt & Sprüngli AG |
- -% | 14539.44 | 37.74 | 38.61 | 5.60 | 5.69 | 5.85 | 27.13 |
| CHLSY Chocoladefabriken Lindt & Sprüngli AG |
- -% | 14.51 | 33.98 | 3.17 | 4.99 | 5.13 | 4.58 | 21.19 |
| BYCBF Barry Callebaut AG |
0.0001 -% | 1732.43 | 38.17 | 14.12 | 0.79 | 2.54 | 1.05 | 15.60 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on July 31, 2025. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
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Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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