- Price
- $168.79
- Fair value
- $230.00
- Discount
- 26.6%
- Uncertainty
- Low
- LSEG rating
- 2.67
- Moat
- Wide
- Next earnings
- 2026-10-30
- Next earnings is estimate
- Yes
- Company name
- The Hershey Company
- Sector
- Chocolate, candy & snacks
- About
- Hershey is the largest chocolate maker in North America. Its best-known brands are Hershey's, Reese's, Kit Kat (which Hershey makes and sells in the US under a license from Nestlé), Jolly Rancher, Twizzlers, and Ice Breakers. North America Confectionery, the chocolate and candy business, brings in about 78% of sales. Hershey also sells salty snacks, including SkinnyPop popcorn, Dot's Homestyle Pretzels, and LesserEvil, an organic snack brand it bought in November 2025. A smaller International segment sells mostly in Mexico, Brazil, India, and the UK. Sales peak around Halloween, Christmas, Valentine's Day, and Easter. The Milton Hershey School Trust, a charity that runs a free boarding school, controls about 80% of the shareholder votes through special Class B shares. This means no one can buy Hershey unless the trust agrees.
- Thesis
- Hershey trades around $168.79, about 27% below its $230 fair value estimate, and near the bottom of its $161-$239 range over the past year. The market is worried about volume. Cocoa prices hit records in late 2024, so Hershey raised its prices by about 12%, and in Q2 2026 it sold about 8% less candy by volume. But profit is recovering. Adjusted gross margin rose from 38.1% to 41.6% in Q2 2026, and management raised its 2026 outlook to adjusted earnings per share of $8.36-$8.52, up 32.5% to 35%. Cocoa has fallen to roughly $5,500 per ton, less than half its peak, and management expects cocoa costs to fall again in 2027. Hershey's brands give it the pricing power a wide moat needs: it raised prices sharply and kept most of its customers. If volumes level off while cocoa costs ease, margins can keep rising through 2027, and the discount can close. The counter-case: if higher prices, weaker low-income shoppers, and weight-loss drugs keep shrinking how much candy people buy, Hershey's growth would rely on price increases it cannot repeat forever. And cocoa has already shown it can jump again, as it did in August 2026.
- Risks
- Hershey is selling less candy. After raising prices by about 12%, volume fell about 8% in Q2 2026. Management said low-income households are under the most pressure. If volume keeps falling once the price increases stop adding growth, sales could shrink.
Hershey's plan to recover its margins depends on cocoa costs falling in 2027. Cocoa jumped to about $6,500 per ton in early September 2026, on forecasts of a supply shortfall in the 2026/27 season, before falling back to about $5,500. Hershey hedges cocoa 3 to 24 months ahead, so a new price spike would hit its costs with a delay, not right away.
GLP-1 weight-loss drugs, like Wegovy and Zepbound, reduce appetite. As more people use them, they may buy less candy and snacks, which would slowly shrink Hershey's main market.
The salty snacks business is growing but earning less. In Q2 2026, segment sales grew 22.9%, mostly from LesserEvil, but segment profit fell 5.9%. Management has pointed to supply problems at Dot's Pretzels that new automation is meant to fix in 2027. Hershey paid about $769 million for LesserEvil, so a weak return there would hurt.
Hershey has changed several top leaders in a short time. CEO Kirk Tanner joined in August 2025, a new Chief Supply Chain Officer started in June 2026, and CFO Dave Hulays took over in September 2026. This much turnover at the top adds execution risk during the margin recovery.
The Milton Hershey School Trust controls about 80% of the shareholder votes. It has blocked takeover bids before, so ordinary shareholders are unlikely to get a buyout premium, and they have little say over the board. The trust has also been selling small amounts of common stock in 2026.
Hershey had about $6.1 billion of debt and $0.8 billion of cash at the end of June 2026. This is manageable for a company this profitable, but it leaves less room for another large acquisition or bigger buybacks while margins recover.
- Recent events
- 2026-09-09: At the Barclays Global Consumer Staples Conference, management described 2026 and 2027 as years of restoring profit after the cocoa spike, and said Hershey would return to a more balanced mix of sales and profit growth from 2028.
2026-09-02: Hershey named Dave Hulays Chief Financial Officer, succeeding Steve Voskuil, who stays on to help with the transition until he retires in Q1 2027. Hulays joined Hershey in 2012 and previously worked at Procter & Gamble.
2026-07-30: Hershey reported Q2 2026 results. Net sales grew 6.6% to $2.79 billion. Prices added about 12 points of growth, while volume fell about 8 points. Adjusted earnings per share grew 57% to $1.90, and adjusted gross margin rose to 41.6% from 38.1%.
2026-07-30: Management raised its 2026 outlook to net sales growth of 4.5%-5% and adjusted earnings per share growth of 32.5%-35%, or $8.36-$8.52. The outlook does not include any refunds of tariffs Hershey paid, which could come after the Supreme Court struck down the IEEPA tariffs in February 2026.
2026-04-30: Hershey reported Q1 2026 results. Net sales grew 10.6% to $3.10 billion, and organic net sales grew 7.9%. In North America Confectionery, prices added about 12 points, and volume fell about 4 points.
2026-03-31: At its Investor Day, Hershey laid out a plan for double-digit earnings per share growth in 2026 and 2027 as margins recover, then 6%-8% earnings per share growth and 2%-4% organic sales growth a year from 2028. It expects free cash flow above $1.8 billion by 2028.
2026-02-05: The board raised the quarterly dividend by 6%, to $1.452 per common share.
2025-11-19: Hershey completed its purchase of LesserEvil, an organic snack brand, for about $769 million in cash, plus up to $200 million more if the brand hits earnings targets.