Stock Analysis

The Hershey Company Just Beat EPS By 43%: Here's What Analysts Think Will Happen Next

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The Hershey Company (NYSE:HSY) just released its latest first-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.5% to hit US$3.3b. Hershey also reported a statutory profit of US$3.89, which was an impressive 43% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Hershey

NYSE:HSY Earnings and Revenue Growth May 7th 2024

Following last week's earnings report, Hershey's 21 analysts are forecasting 2024 revenues to be US$11.5b, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 4.7% to US$9.77 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$11.5b and earnings per share (EPS) of US$9.41 in 2024. So the consensus seems to have become somewhat more optimistic on Hershey's earnings potential following these results.

There's been no major changes to the consensus price target of US$206, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Hershey, with the most bullish analyst valuing it at US$239 and the most bearish at US$170 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Hershey's revenue growth is expected to slow, with the forecast 0.3% annualised growth rate until the end of 2024 being well below the historical 8.8% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.9% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Hershey.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Hershey following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hershey's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$206, 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. At Simply Wall St, we have a full range of analyst estimates for Hershey going out to 2026, and you can see them free on our platform here..

Even so, be aware that Hershey is showing 1 warning sign in our investment analysis , you should know about...

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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.