The Hershey Company Just Missed Earnings - But Analysts Have Updated Their Models

The Hershey Company (NYSE:HSY) just released its latest quarterly report and things are not looking great. Results look to have been somewhat negative - revenue fell 2.8% short of analyst estimates at US$3.0b, and statutory earnings of US$2.20 per share missed forecasts by 8.4%. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Hershey

Following the latest results, Hershey's 22 analysts are now forecasting revenues of US$11.5b in 2025. This would be a credible 4.6% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$8.71, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$11.6b and earnings per share (EPS) of US$9.13 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target fell 5.3% to US$185, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hershey analyst has a price target of US$222 per share, while the most pessimistic values it at US$155. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hershey shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hershey's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Hershey's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.7% growth on an annualised basis. This is compared to a historical growth rate of 8.6% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 2.8% per year. So it's pretty clear that, while Hershey's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Hershey's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Hershey. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Hershey analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Hershey that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.