Hershey Shares Tumble Despite Earnings Beat

Published on: 26 Jul, 2019

The Hershey Company (NYSE: HSY) on Thursday reported earnings that surpassed analysts’ expectations. However, Hershey’s stock is trading 3% lower on Thursday as investors react to the Company’s inability to significantly increase its net sales.

One of the largest chocolate manufacturers in the world, Hershey reported consolidated net sales of USD 1.767 Billion in the second quarter of 2019. This figure compares to net sales of USD 1.752 Billion in the same quarter of the year prior, representing a 0.9% increase year-over-year. Quarterly sales fell below analyst estimates by 0.17%. The Pennsylvania based chocolate company reported net income of USD 312.8 Million, an increase of 37%.

Hershey reported second quarter earnings of USD 1.31 per share, beating estimates of USD 1.14 per share. The Company has been able to increase its earnings per share by 14.91% compared to the same quarter of the year prior.

Selling, marketing, and administrative expenses increased by 0.9%, driven by advertising expenses. Advertising and related consumer marketing expenses increased 5.6% in the second quarter. Excluding advertising and related consumer marketing; selling, marketing, and administrative expenses decreased 1.4%.

Looking ahead, Hershey provided an optimistic outlook. Full-year reported net sales are expected to increase between 1% and 3%. Full-year earnings per share are expected to be in the range of USD 5.54 to USD 5.66, representing no change from the prior year.

Hershey’s stock has a 52-week high of USD 147.89 and a 52-week low of USD 94.78. The wide range shows a level of volatility, dependent on earnings reports and press releases.

“We are pleased with our second quarter results and the momentum we are seeing behind our key initiatives for this year,” said Michele Buck, The Hershey Company President and Chief Executive Officer.  “We continue to deliver differentiated results by growing both top and bottom line while investing in our brands and capabilities.  We are on track to deliver our financial commitments for the year driven by accelerated U.S. performance, a strengthened international business and continued operational excellence.”

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Bryan Nifenecker

Email: bryannif@financialbuzz.com

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