Earnings Beat: The Hershey Company Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

By
Simply Wall St
Published
November 10, 2020
NYSE:HSY

As you might know, The Hershey Company (NYSE:HSY) just kicked off its latest third-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.8% to hit US$2.2b. Hershey also reported a statutory profit of US$2.14, which was an impressive 25% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Hershey

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NYSE:HSY Earnings and Revenue Growth November 10th 2020

Taking into account the latest results, the consensus forecast from Hershey's 15 analysts is for revenues of US$8.25b in 2021, which would reflect a credible 2.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to climb 14% to US$6.50. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.20b and earnings per share (EPS) of US$6.40 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$154, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Hershey analyst has a price target of US$172 per share, while the most pessimistic values it at US$131. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Hershey's growth to accelerate, with the forecast 2.7% growth ranking favourably alongside historical growth of 2.0% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 3.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hershey is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$154, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Hershey going out to 2022, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Hershey that you should be aware of.

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This article by Simply Wall St is general in nature. 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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