A Fresh Look at Hershey (HSY) Valuation After Strong Sales Growth and Margin Pressures

If you’re holding or watching Hershey (HSY) right now, you probably noticed a lot more action than usual this week. The company’s latest quarterly report wasn’t just a numbers beat. Net sales jumped 26% year over year, easily clearing sales and earnings expectations. However, even as volumes and pricing climbed, rising commodity and manufacturing costs, plus a bump in advertising spending, trimmed margins. Management now expects sales to grow at least 2% in 2025, but they’re guiding for a decline in adjusted earnings per share for the year. This mixed bag has plenty of investors debating what comes next.

We’ve seen Hershey’s momentum fluctuate this year. Shares are up about 14% over the past three months, but performance across the last year has lagged, with a nearly 4% dip. That contrast between short-term energy and longer-term drift sets up a real valuation puzzle, especially against the backdrop of a board retirement announcement and ongoing pressures in input costs and marketing. For long-term shareholders, it is clear the market is still digesting how sales growth balances against shrinking profits.

So, is Hershey starting to look appealing after this quarter, or is the market already pricing in future gains and the ongoing margin squeeze? Let’s dig deeper into what the valuation says.

Most Popular Narrative: Fairly Valued

According to the most widely followed narrative, Hershey is considered fairly valued at current prices. This view is based on projections of moderate revenue and earnings growth balanced against margin pressures and external risks.

"Hershey’s innovation pipeline, particularly with the upcoming significant Reese's innovation, is poised to drive incremental market share gains and increased sales, promising revenue growth and potentially improving earnings given successful execution."

Craving the real story behind Hershey’s price tag? The heartbeat of this narrative is a delicate balance between ambitious top-line goals and pressure on profits. What bold forecast lies beneath the surface? Uncover the financial assumptions that could redefine this confectioner's trajectory.

Result: Fair Value of $184.64 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, elevated cocoa prices and a challenging consumer landscape could quickly shift sentiment and put additional pressure on Hershey’s margin story.

Find out about the key risks to this Hershey narrative.

Another View: Market’s Multiple Tells a Different Story

Looking through the lens of price-to-earnings compared to the industry, a different picture appears. This method suggests Hershey’s stock might be more expensive than its peers. Does the market know something the numbers don’t?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Hershey to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Hershey Narrative

If you see things differently, or want to challenge the numbers with your own research, why not craft a custom narrative in just minutes using Do it your way.

A great starting point for your Hershey research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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