Is Hershey Stock Underperforming the Dow?

The Hershey Company (HSY), headquartered in Hershey, Pennsylvania, manufactures and sells confectionery products and pantry items. Valued at $34.8 billion by market cap, the company's principal products include chocolate and sugar confectionery products, gum and mint refreshment products, and pantry items, such as baking ingredients, toppings, and beverages.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and Hershey perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the confectioners industry. Hershey's strength lies in its strong brand portfolio, including popular names like Hershey's, Reese's, and Kit Kat. With a significant share of the U.S. chocolate market, Hershey's dominant market position provides pricing power and competitive advantage. 

Despite its notable strength, HSY slipped 28.1% from its 52-week high of $239.48, achieved on Mar. 2. Over the past three months, HSY stock declined 2.1%, underperforming the Dow Jones Industrials Average’s ($DOWI) 3% gains during the same time frame.

Shares of HSY have fell 5.4% on a YTD basis and dipped 8.3% over the past 52 weeks, underperforming DOWI’s YTD gains of 9% and 14.6% returns over the same time frame.

To confirm the bearish trend, HSY has been trading below its 200-day moving average since mid-April, with slight fluctuations. The stock is trading below its 50-day moving average since mid-March, experiencing some fluctuations. 

HSY lagged on international margin pressure despite solid demand in Brazil, the U.K., and India. Delayed cocoa pricing and higher logistics costs weighed on margins, especially in salty snacks. Management is leaning on productivity and technology to drive a rebound.

On Jul. 30, HSY shares closed down by 3.6% after reporting its Q2 results. Its adjusted EPS of $1.90 surpassed Wall Street expectations of $1.45. The company’s revenue was $2.8 billion, exceeding Wall Street forecasts of $2.7 billion. HSY expects full-year adjusted EPS in the range of $8.36 to $8.52.

HSY’s rival, Mondelez International, Inc. (MDLZ) shares have taken the lead over the stock, with marginal losses over the past 52 weeks and a 16% uptick on a YTD basis.

Wall Street analysts are reasonably bullish on HSY’s prospects. The stock has a consensus “Moderate Buy” rating from the 22 analysts covering it, and the mean price target of $204.10 suggests an 18.5% potential upside from current price levels. 

On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.