⚠️ This AI-generated report synthesizes publicly available information. AI can make mistakes. Please double check information in this report.
The Hershey Company
Consumer Defensive | Confectioners
⚡ Executive Summary
📊 THE BOTTOM LINE
Hershey Company is a dominant player in the U.S. confectionery and snack markets, boasting an extensive portfolio of beloved brands. Its robust distribution network and market leadership underpin a solid business model, though the company faces challenges from rising input costs like cocoa inflation and intense competition in a mature market.
⚖️ RISK VS REWARD
At its current price of US$182.30, Hershey trades within analysts' price target range, suggesting a fair valuation. Potential upside to the high target of US$220 exists from snack expansion and international growth. However, risks from persistent cocoa inflation and evolving consumer preferences could limit gains. The risk/reward appears balanced for long-term investors seeking stability in consumer staples.
🚀 WHY HSY COULD SOAR
- • Continued expansion and market share gains in the growing salty snacks segment could significantly boost revenue and diversify its portfolio beyond traditional confectionery.
- • Successful penetration and growth in key international markets, such as Brazil, India, and Mexico, represent substantial untapped opportunities for long-term revenue acceleration.
- • Strategic brand investments and product innovation, particularly in premium and 'better-for-you' options, can strengthen pricing power and protect margins despite rising input costs.
⚠️ WHAT COULD GO WRONG
- • Persistent and escalating cocoa inflation poses a significant threat to gross margins, potentially impacting profitability if price increases cannot fully offset higher raw material costs.
- • Intensified competition from major global players and agile niche brands in both confectionery and salty snacks could lead to market share erosion and pricing pressure.
- • Shifting consumer preferences towards healthier eating and reduced sugar intake could dampen demand for traditional confectionery products, necessitating costly product reformulations or portfolio shifts.
🏢 Company Overview
💰 How HSY Makes Money
- • Manufactures and sells a wide array of chocolate and non-chocolate confectionery products to consumers globally.
- • Offers various pantry items including baking ingredients, toppings, and beverages, extending its reach into household staples.
- • Engages in the production and sale of diverse snack items such as spreads, bars, popcorn, and pretzels, diversifying its product offerings.
- • Markets products through a broad distribution network encompassing wholesale distributors, grocery chains, mass merchandisers, and convenience stores.
Revenue Breakdown
North America Confectionery
70%
Chocolate and non-chocolate candies sold in the US and Canada (estimated).
North America Salty Snacks
20%
Popcorn, pretzels, and other savory snacks sold in the US and Canada (estimated).
International
10%
Confectionery and snack products sold outside North America (estimated).
🎯 WHY THIS MATTERS
Hershey's diversified revenue streams across confectionery and growing snack categories, combined with a robust distribution network, provide resilience against market fluctuations. Its strong presence in North America, particularly in chocolate, offers a stable base for profitability and cash flow, while international expansion and salty snacks contribute growth opportunities.
⭐ Competitive Advantage: What Makes HSY Special
1. Extensive Brand Portfolio
Hershey boasts over 100 well-recognized brands, including iconic names like Hershey's, Reese's, Kit Kat, and SkinnyPop. This vast portfolio caters to diverse consumer tastes and occasions, fostering strong brand loyalty and allowing for cross-selling opportunities. The sheer breadth and recognition of its brands create a significant barrier to entry for new competitors.
2. Dominant U.S. Market Share
The company commands a significant lead in the U.S. chocolate market, controlling approximately 36% to 45% of the domestic chocolate aisle. This market dominance provides substantial pricing power, economies of scale in manufacturing and marketing, and strong relationships with retailers, making it difficult for rivals to gain significant traction.
3. Robust Distribution Network
Hershey benefits from an extensive and deeply entrenched distribution network, reaching a wide array of customers from large chain grocery stores and mass merchandisers to convenience stores and vending companies. This pervasive reach ensures its products are readily available to consumers across various channels, a critical advantage in the fast-moving consumer goods sector.
🎯 WHY THIS MATTERS
These competitive advantages collectively form a strong moat around Hershey's business. Its iconic brands drive consumer preference and loyalty, while its market dominance and unparalleled distribution ensure widespread availability. This combination enables the company to maintain leading market positions, command premium pricing, and generate consistent profitability over the long term, even amidst competitive pressures.
👔 Who's Running The Show
Kirk Tanner
President and Chief Executive Officer
Kirk Tanner assumed the role of President and CEO of The Hershey Company in August 2025. He is a seasoned executive with a performance-driven track record. His leadership is expected to steer Hershey through evolving market dynamics and reinforce its strategic initiatives in confectionery and snacking.
⚔️ What's The Competition
The confectionery and salty snack markets are intensely competitive, characterized by the presence of large multinational corporations and numerous smaller, agile players. Competition revolves around brand recognition, product innovation, pricing, and distribution reach. Major rivals include Mars and Mondelez, alongside regional specialists.
📊 Market Context
- Total Addressable Market - The global confectionery market was US$223.64 billion in 2024, projected to grow at a 4.06% CAGR to US$332.96 billion by 2034. The global salty snacks market was US$266.17 billion in 2024, projected to reach US$416.47 billion by 2032 with a 5.1% CAGR.
- Key Trend - Consumer demand for healthier snack options and premium indulgent treats drives innovation and portfolio diversification across the industry.
Competitor
Description
vs HSY
Mars, Incorporated
A privately-held global leader in confectionery, pet care, and food products, known for M&M's, Snickers, and Wrigley's.
Mars is a direct competitor across many confectionery categories, holding a significant global market share (approx. 11%), with a broader diversified portfolio.
Mondelez International, Inc.
A multinational food and beverage company known for brands like Oreo, Cadbury, and Trident gum.
Mondelez competes directly in chocolate, biscuits, and gum, with a strong international presence and diverse product offerings globally.
Nestlé S.A.
The world's largest food and beverage company, with a vast array of products including confectionery (e.g., Kit Kat outside the US).
Nestlé competes in various food sectors including confectionery, leveraging its massive global scale and extensive product categories.
Market Share - Global Confectionery Market Share 2024
Hershey
10%
Mars
11%
Mondelez
15%
Nestlé
12%
Others
52%
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 1 Strong Sell, 2 Sell, 16 Hold, 3 Buy, 2 Strong Buy
1
2
16
3
2
12-Month Price Target Range
Low Target
US$131
-28%
Average Target
US$190
+4%
High Target
US$220
+21%
Current: US$182.30
🚀 The Bull Case - Upside to US$220
1. Salty Snack Portfolio Growth
High Probability
Hershey's strategic acquisitions like SkinnyPop and Dot's Homestyle Pretzels position it for significant growth in the rapidly expanding salty snacks market, diversifying revenue away from traditional confectionery and attracting new consumer segments.
2. International Market Expansion
Medium Probability
Despite a smaller international footprint, focused efforts in high-growth markets such as Brazil, India, and Mexico offer substantial long-term revenue opportunities, leveraging its global brand recognition.
3. Sustained Brand Equity & Innovation
Probability
Continuous investment in its iconic brands and a pipeline of innovative products, including 'better-for-you' options, can reinforce pricing power, attract new consumers, and enhance market share in a competitive landscape.
🐻 The Bear Case - Downside to US$131
1. Unrelenting Cocoa Price Inflation
High Probability
Persistent increases in cocoa prices, as highlighted in analyst reports, pose a significant threat to Hershey's profitability by increasing cost of goods sold and potentially pressuring gross margins if price increases lag behind input cost inflation.
2. Intense Competitive Pressure
Medium Probability
The highly competitive nature of both the confectionery and salty snack markets, with formidable global players, could lead to pricing wars, increased marketing spend, and potential erosion of market share.
3. Shifting Consumer Health Preferences
Probability
A societal shift towards healthier eating habits and reduced sugar consumption could diminish demand for traditional confectionery products, requiring substantial investment in R&D for new product formulations and marketing to adapt.
🔮 Final thought: Is this a long term relationship?
Owning Hershey for a decade hinges on its ability to navigate rising commodity costs and evolving consumer preferences while leveraging its formidable brand strength and distribution. The company's established market leadership and expansion into salty snacks provide a solid foundation. However, sustaining growth in mature markets requires continuous innovation and careful management of its supply chain. Long-term success will depend on effective leadership to adapt to health trends and maintain competitive advantages against aggressive rivals, ensuring its brands remain relevant and desirable.
📋 Appendix
Financial Performance
Metric
FY 2022
FY 2023
FY 2024
FY 2025 (Est)
FY 2026 (Est)
Income Statement
Revenue
US$10.42B
US$11.16B
US$11.20B
US$11.49B
US$12.24B
Gross Profit
US$4.50B
US$5.00B
US$5.30B
US$4.34B
US$4.62B
Operating Income
US$2.26B
US$2.56B
US$2.93B
US$1.95B
US$2.08B
Net Income
US$1.64B
US$1.86B
US$2.22B
US$1.36B
US$1.45B
EPS (Diluted)
7.96
9.06
10.92
6.69
7.12
Balance Sheet
Cash & Equivalents
US$0.46B
US$0.40B
US$0.73B
US$1.16B
US$1.19B
Total Assets
US$10.95B
US$11.90B
US$12.95B
US$13.58B
US$13.84B
Total Debt
US$5.12B
US$5.13B
US$5.45B
US$5.74B
US$5.86B
Shareholders' Equity
US$3.30B
US$4.10B
US$4.71B
US$4.56B
US$4.66B
Key Ratios
Gross Margin
43.2%
44.8%
47.3%
37.7%
37.7%
Operating Margin
21.7%
22.9%
26.1%
13.5%
13.5%
Return on Equity
49.85
45.42
47.11
31.01
31.01
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 27.25 | The P/E ratio (Trailing Twelve Months) indicates how much investors are willing to pay for each dollar of a company's past earnings over the last year. |
| Forward P/E | 21.70 | The Forward P/E ratio is a measure of the price to estimated future earnings, offering insight into how the market expects a company to perform. |
| PEG Ratio | N/A | The PEG ratio (Price/Earnings to Growth ratio) relates the P/E ratio to the company's earnings growth rate, used to determine if a stock is overvalued or undervalued relative to its growth prospects. |
| Price/Sales (TTM) | 3.22 | The Price/Sales ratio (Trailing Twelve Months) compares the company's market capitalization to its total revenue over the past year, useful for valuing companies with unstable earnings. |
| Price/Book (MRQ) | 8.10 | The Price/Book ratio (Most Recent Quarter) compares a company's market value to its book value, indicating how investors value the company's net assets. |
| EV/EBITDA | 16.95 | Enterprise Value to EBITDA measures a company's total value relative to its earnings before interest, taxes, depreciation, and amortization, often used to compare companies with different capital structures. |
| Return on Equity (TTM) | 31.01 | Return on Equity (Trailing Twelve Months) measures the profitability of a company in relation to the equity of its shareholders, indicating how efficiently management is using shareholder investments to generate profits. |
| Operating Margin | 13.54 | Operating Margin indicates how much profit a company makes on each dollar of sales after paying for variable costs, but before interest and taxes, reflecting operational efficiency. |
Peer Comparison
| Company | Market Cap (B) | P/E Ratio | P/B Ratio | Revenue Growth (%) | Operating Margin (%) |
|---|---|---|---|---|---|
| The Hershey Company (Target) | 36.97 | 27.25 | 8.10 | 6.5% | 13.5% |
| Mondelez International, Inc. | 70.80 | 21.48 | N/A | 4.1% | 11.5% |
| Nestlé S.A. | 370.00 | 20.99 | 8.92 | -8.9% | 16.4% |
| Mars, Incorporated | N/A | N/A | N/A | N/A | N/A |
| Sector Average | — | 21.24 | 8.92 | -2.4% | 14.0% |