Hershey Co (HSY)HSY

Hershey Co. Stock Overview (November 2023)

Company Profile:

History and Background:

• Founded in 1894 by Milton S. Hershey
• Grew from a small caramel company to a global confectionery leader
• Known for its iconic chocolate bars, candies, and snacks

Core Business Areas:

• Chocolate and Confectionery: Includes Hershey's Kisses, Reese's, Kit Kat, Twizzlers, and more
• Snacks: Includes SkinnyPop popcorn, Pirate's Booty, and other savory snacks
• International: Operates in over 80 countries, with a strong presence in North America

Leadership and Structure:

• CEO: Michele Buck (since 2021)
• Strong leadership team with experience in consumer goods and international markets
• Decentralized organizational structure with regional business units

Top Products and Market Share:

Top Products:

• Hershey's Milk Chocolate Bar
• Reese's Peanut Butter Cups
• Kit Kat
• Twizzlers
• Kisses

Market Share:

• Leading market share in the US chocolate market (around 44%) and candy market (around 30%)
• Strong presence in other categories like cookies and popcorn

Product Performance:

• Hershey's flagship products continue to perform well
• Innovation and new product launches drive growth in key categories

Competition:

• Mars Wrigley (M&M's, Snickers, Skittles)
• Mondelez International (Oreo, Cadbury, Trident)
• Ferrero (Nutella, Ferrero Rocher)

Total Addressable Market (TAM):

• Global chocolate market: estimated at $135 billion in 2023
• US candy market: estimated at $35 billion in 2023

Financial Performance:

Recent Financial Performance:

• Revenue: $9.4 billion (2022)
• Net Income: $1.1 billion (2022)
• Profit Margin: 11.7% (2022)
• EPS: $5.34 (2022)

Year-over-Year Performance:

• Revenue growth of 7.4% (2022)
• Net income growth of 9.2% (2022)
• EPS growth of 8.5% (2022)

Cash Flow and Balance Sheet:

• Strong cash flow generation
• Healthy balance sheet with low debt

Dividends and Shareholder Returns:

Dividend History:

• Consistent dividend payer with a dividend yield of around 1.8%
• Payout ratio of approximately 50%

Shareholder Returns:

• Total shareholder return of 15% over the past year
• 5-year total shareholder return of 80%

Growth Trajectory:

Historical Growth:

• Steady revenue and earnings growth over the past 5 to 10 years

Future Growth Projections:

• Analysts expect mid-single digit revenue and earnings growth in the next few years
• Growth drivers include new product launches, international expansion, and cost-saving initiatives

Market Dynamics:

Industry Trends:

• Growing demand for healthier snacks and indulgence treats
• Increasing popularity of e-commerce and online shopping
• Focus on sustainability and ethical sourcing

Hershey's Positioning:

• Well-positioned to benefit from industry trends with its strong brand portfolio and innovation capabilities

Competitors:

Key Competitors:

• Mars Wrigley (MARS)
• Mondelez International (MDLZ)
• Ferrero (private)

Market Share Comparison:

• Hershey has a leading market share, but faces competition from major players

Competitive Advantages:

• Iconic brands
• Strong distribution network
• Innovation capabilities

Challenges and Opportunities:

Challenges:

• Supply chain disruptions
• Rising commodity costs
• Intense competition

Opportunities:

• New product launches
• International expansion
• E-commerce growth

Recent Acquisitions (2021-2023):

• Amplify Snack Brands (2023): Expands its presence in the better-for-you snack category with brands like SkinnyPop popcorn and Pirate’s Booty.
• Dot's Homestyle Pretzels (2021): Expands its snack portfolio with a leading pretzel brand.

AI-based Fundamental Rating:

Rating: 8/10

Justification: Hershey Co. has strong fundamentals, including a leading market position, consistent growth, and healthy cash flow generation. However, competitive pressures and industry challenges could impact future growth.

Sources:

• Hershey Co. Investor Relations website
• Bloomberg
• Reuters
• Statista

Disclaimer: This information is for educational purposes only and should not be construed as financial advice. Please consult with a professional financial advisor before making any investment decisions.