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The Hershey Co HSY

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Hershey Boasts a Sweetened Sales Profile in Q2, but We'd Refrain From Snacking on Shares

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

Ahead of wide-moat Hershey’s second-quarter results, we think investors had locked in robust sales gains and profit preservation (with shares up at a low-double-digit clip since the end of the first quarter). On both metrics, the confectionery manufacturer didn't disappoint, clocking in 15.5% organic sales growth (albeit against a weak year ago, when sales slipped 3.5%), or low-double-digit growth on a two-year stack, and 50 basis points of adjusted operating margin expansion to 23.1%.

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Company Profile

Business Description

Hershey is a leading confectionery manufacturer in the U.S. (nearly a $25 billion market), controlling around 46% of the domestic chocolate space (per IRI). Beyond its namesake label, the firm's mix has expanded over the last 85 years and now consists of 90 brands, including Reese's, Kit Kat, Kisses, and Ice Breakers. Hershey's products are sold in about 85 countries, with just 10% of total sales coming from markets outside the U.S., including Brazil, China, India, and Mexico. The firm has sought inorganic opportunities to extend its reach beyond its core confection business, adding Amplify Snack Brands and its Skinny Pop ready-to-eat popcorn to its mix and Pirate Brands (including the Pirate’s Booty, Smart Puffs, and Original Tings brands) over the past few years.

19 East Chocolate Avenue
Hershey, PA, 17033
T +1 717 534-4200
Sector Consumer Defensive
Industry Confectioners
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Classic Growth
Employees 16,880