- Price
- $168.79 → $166.37(−1.4%)
- Discount
- 26.6% → 27.7%(+1.1 pts)
- Thesis
- Hershey trades around $168.79,'s price reflects worry about 27% below its $230 fair value estimateshrinking candy volumes, and near the bottom of its $161-$239 range over the past yearnot a temporary mood. The market is worried about volume. Cocoa prices hit recordsspiked in late 2024, so Hershey raised its prices by about 12%, and in Q2 2026 it sold about 8%. Shoppers responded by buying less candy by volume. But profit is recovering. Adjusted grossGross margin rose from 38.1% to 41.6%sharply in Q2 2026the most recent quarter, and management raised its 2026 outlook to adjustedfull-year earnings per share of $8outlook.36-$8.52, up 32.5% to 35%. Cocoa has fallen to roughly $5,500 per ton, less than halffrom its peak, and management expects further declines into 2027, though cocoa costs to falljumped again briefly in early September 2026 before easing. For the gap to close, volume needs to stop falling while cocoa costs keep easing. That would let margins keep rising through 2027. Hershey's brands give it theshowed real pricing power a wide moat needs: it, since the company 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-main risk to this case: if higher is that high prices, a weaker low-income shoppersshopper, and weight-loss drugs keep shrinking how much candy people buy, Hershey's. Management has described 2026 and 2027 as years of restoring profit. It expects a more balanced mix of sales and profit growth would rely on price increases it cannot repeat foreverto return from 2028. AndThe next tests are cocoa has already shown it can jumpcosts through the rest of 2026 and full-year 2026 results due in early 2027. If volumes stabilize and cocoa keeps easing, the gap could close over the next several quarters. If cocoa spikes again or volumes keep falling, as it did in August 2026could take until 2028.