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Hershey's (HSY) Q1 Earnings Surpass Estimates, Sales Up
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The Hershey Company (HSY - Free Report) reported robust first-quarter 2021 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Moreover, sales and earnings increased year over year. Results gained from solid performance in the North America as well as International and Other segment. Owing to solid first-quarter results, management raised its 2021 view.
Q1 in Details
Adjusted earnings per share (EPS) of $1.92 came ahead of the Zacks Consensus Estimate of $1.81 and increased 17.8% year over year.
Consolidated net sales of $2,295.9 million increased 12.7% year over year and surpassed the Zacks Consensus Estimate of $2,104.4 million. Price realization and volume growth were 1.9 point and 11 point, respectively. Volumes benefited from continued momentum in the North America segment along with robust rebound in the International & Other segment. However, the impact of divestitures was negative to the tune of 0.1 point due to divestitures of Kraveas well as the Scharffen Berger and Dagoba brands. Also, unfavorable foreign currency rates affected sales by 0.1 point. Further, organic net sales on a constant-currency (cc) basis increased 12.9%.
Hershey Company The Price, Consensus and EPS Surprise
Adjusted gross margin contracted 80 basis points (bps) to 45.8% owing to raw material and packaging cost inflation along with higher supply chain costs. Selling, marketing and administrative costs increased 4.1% due to increased advertising in the North America segment and corporate expenses. Advertising and related consumer marketing expenses rose 2.8% due to higher investments in core brands, innovation as well as greater sponsorships in North America. Further, selling, marketing and administrative expenses, excluding advertising and related consumer marketing, increased 4.8% thanks to higher accruals for incentive compensation as well as greater investments in capabilities and technology. These were somewhat offset by savings led by reduced travel and meeting amid the pandemic.
Adjusted operating profit increased 17.9% to $555.7 million, while adjusted operating profit margin expanded 110 bps to 24.2%. The upside was led by solid volume gains in the North America and International and Other units. However, gross margin pressures owing to increased input costs and supply chain complexities among others were a drag.
Segmental Update
North America (the United States and Canada) net sales increased 12.8% year over year to $2,081.9 million. Markedly, volume contributed 11 points to net sales growth on the back of strong seasonal performance, continued momentum in the take-home chocolate portfolio and rebound in non-measured businesses. Also, two extra order days in the first quarter added to the upside. Further, net price realization contributed 1.7 point benefit driven by increase in list price and trade favorability. Moreover, favorable currency boosted sales in the unit by 0.2 point. However, impact of divestiture dented the unit by 0.1 point.
Net sales in the International and Other segment rallied 11.2% to $214.1 million. On a cc basis, net sales increased 14.9%. Volume and price realization contributed 11 point and 3.9 point benefit, respectively. The company highlighted that stronger than anticipated consumer mobility drove growth in the segment, although trends in the markets continue to remain volatile.
Financials
Hershey ended the quarter with cash and cash equivalents of $1,132.2 million, long-term debt of $4,094.2 million and total shareholders’ equity of $2,264.8 million.
In a separate press release, the company declared a quarterly dividend of 80.4 cents per share for its common stock and 73.1 cents for Class B common stock. These are payable on Jun 15, 2021 to shareholders of record as of May 21. Notably, this marks the company’s 366th and 147th straight dividend payout on its common stock and Class B common stock, respectively.
2021 Outlook
Owing to solid first-quarter performance and impressive projections for the rest of the year, the company is updating its 2021 outlook upward. Incidentally, management noted that greater-than-anticipated consumer mobility as well as increased distribution and merchandising opportunities in North America confection are driving growth.
Hershey now expects its 2021 net sales to increase 4-6%. Earlier, management had guided for net sales growth of 2-4%. Further, the company now projects adjusted EPS in the range of $6.79-$6.92, which suggests growth of 8-10% year over year. Notably, the metric came in at $6.29 in 2020. Prior to this, the metric was expected to grow 6-8%. Well, the increased earnings outlook reflects volume gains, somewhat offset by increased input costs and incentive compensation.
Shares of this Zacks Rank #3 (Hold) company have gained 9.5% in the past three months compared with the industry’s growth of 8%.
Aramark (ARMK - Free Report) currently carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 50.8%.
United Natural Foods, Inc. (UNFI - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Hershey's (HSY) Q1 Earnings Surpass Estimates, Sales Up
The Hershey Company (HSY - Free Report) reported robust first-quarter 2021 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Moreover, sales and earnings increased year over year. Results gained from solid performance in the North America as well as International and Other segment. Owing to solid first-quarter results, management raised its 2021 view.
Q1 in Details
Adjusted earnings per share (EPS) of $1.92 came ahead of the Zacks Consensus Estimate of $1.81 and increased 17.8% year over year.
Consolidated net sales of $2,295.9 million increased 12.7% year over year and surpassed the Zacks Consensus Estimate of $2,104.4 million. Price realization and volume growth were 1.9 point and 11 point, respectively. Volumes benefited from continued momentum in the North America segment along with robust rebound in the International & Other segment. However, the impact of divestitures was negative to the tune of 0.1 point due to divestitures of Kraveas well as the Scharffen Berger and Dagoba brands. Also, unfavorable foreign currency rates affected sales by 0.1 point. Further, organic net sales on a constant-currency (cc) basis increased 12.9%.
Hershey Company The Price, Consensus and EPS Surprise
Hershey Company The price-consensus-eps-surprise-chart | Hershey Company The Quote
Adjusted gross margin contracted 80 basis points (bps) to 45.8% owing to raw material and packaging cost inflation along with higher supply chain costs. Selling, marketing and administrative costs increased 4.1% due to increased advertising in the North America segment and corporate expenses. Advertising and related consumer marketing expenses rose 2.8% due to higher investments in core brands, innovation as well as greater sponsorships in North America. Further, selling, marketing and administrative expenses, excluding advertising and related consumer marketing, increased 4.8% thanks to higher accruals for incentive compensation as well as greater investments in capabilities and technology. These were somewhat offset by savings led by reduced travel and meeting amid the pandemic.
Adjusted operating profit increased 17.9% to $555.7 million, while adjusted operating profit margin expanded 110 bps to 24.2%. The upside was led by solid volume gains in the North America and International and Other units. However, gross margin pressures owing to increased input costs and supply chain complexities among others were a drag.
Segmental Update
North America (the United States and Canada) net sales increased 12.8% year over year to $2,081.9 million. Markedly, volume contributed 11 points to net sales growth on the back of strong seasonal performance, continued momentum in the take-home chocolate portfolio and rebound in non-measured businesses. Also, two extra order days in the first quarter added to the upside. Further, net price realization contributed 1.7 point benefit driven by increase in list price and trade favorability. Moreover, favorable currency boosted sales in the unit by 0.2 point. However, impact of divestiture dented the unit by 0.1 point.
Net sales in the International and Other segment rallied 11.2% to $214.1 million. On a cc basis, net sales increased 14.9%. Volume and price realization contributed 11 point and 3.9 point benefit, respectively. The company highlighted that stronger than anticipated consumer mobility drove growth in the segment, although trends in the markets continue to remain volatile.
Financials
Hershey ended the quarter with cash and cash equivalents of $1,132.2 million, long-term debt of $4,094.2 million and total shareholders’ equity of $2,264.8 million.
In a separate press release, the company declared a quarterly dividend of 80.4 cents per share for its common stock and 73.1 cents for Class B common stock. These are payable on Jun 15, 2021 to shareholders of record as of May 21. Notably, this marks the company’s 366th and 147th straight dividend payout on its common stock and Class B common stock, respectively.
2021 Outlook
Owing to solid first-quarter performance and impressive projections for the rest of the year, the company is updating its 2021 outlook upward. Incidentally, management noted that greater-than-anticipated consumer mobility as well as increased distribution and merchandising opportunities in North America confection are driving growth.
Hershey now expects its 2021 net sales to increase 4-6%. Earlier, management had guided for net sales growth of 2-4%. Further, the company now projects adjusted EPS in the range of $6.79-$6.92, which suggests growth of 8-10% year over year. Notably, the metric came in at $6.29 in 2020. Prior to this, the metric was expected to grow 6-8%. Well, the increased earnings outlook reflects volume gains, somewhat offset by increased input costs and incentive compensation.
Shares of this Zacks Rank #3 (Hold) company have gained 9.5% in the past three months compared with the industry’s growth of 8%.
Some Solid Food Bets
Sanderson Farms, Inc. , currently sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 43.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aramark (ARMK - Free Report) currently carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 50.8%.
United Natural Foods, Inc. (UNFI - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>