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Hershey (HSY) Thrives on Innovation & Pricing Amid Cost Woes
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The Hershey Company (HSY - Free Report) has been benefiting from its strategic pricing initiatives. The largest producer of quality chocolate products in the United States has been focused on strengthening its portfolio through prudent acquisitions and regular innovation.
Pricing & Capacity Expansion
In the second quarter of 2023, organic pricing contributed a substantial 7.7% to Hershey’s organic net sales growth. This positive trend was evident across various segments of the company. In the North America Confectionery unit, organic price contributed 8.4% to organic net sales growth. This strategic approach to pricing has proven to be a key driver of Hershey's overall growth strategy.
HSY's commitment to growth extends beyond acquisitions and into capacity expansion initiatives. The company's ongoing construction of a chocolate-making facility in Hershey, PA, underscores its dedication to increasing production capacity by nearly 5% in 2023. This strategic move positions Hershey to meet the growing demand, while optimizing its operational efficiency, output and service levels.
These efforts align with Hershey's broader strategy to continually enhance its network and ensure that it remains well-positioned to capture market opportunities.
Image Source: Zacks Investment Research
Buyouts & Innovation Add to Portfolio Strength
Hershey has been actively pursuing strategic acquisitions to bolster its portfolio strength and drive revenue growth. In April 2023, the company entered an agreement to acquire two production facilities from Weaver Popcorn Manufacturing. This renowned player in popcorn production, co-packing and co-manufacturer of Hershey's SkinnyPop brand presents a promising opportunity for Hershey.
Hershey's key brands such as Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher, Brookside, Sofit, and Ice Breakers have thrived due to investments in advertising, in-store displays, innovation and strategic marketing. The company consistently infuses innovation into its core brands to fulfill unmet consumer needs. Solid media marketing amplifies brand support, while seasonal portfolios tailored to consumer shopping trends further exemplify Hershey's strategic acumen.
Cost Escalation Hurts
Hershey has been grappling with the persistent issue of escalating selling, marketing and administrative expenses. In the second quarter of 2023, the company witnessed a 5.2% year-over-year increase in this metric, primarily driven by elevated levels of investments in media and capabilities. This was largely attributed to factors such as wage and benefits inflation, as well as investments in capabilities and technology.
The ongoing challenge in cost management has put pressure on Hershey's operational efficiency and profitability.
Wrapping Up
The above-mentioned upsides place Hershey well despite the cost-related hurdles. Management envisions net sales growth of 8% for 2023. Adjusted EPS is envisioned to increase 11-12% to $9.46-$9.54 in 2023.
Shares of this Zacks Rank #3 (Hold) company have declined 1% over the past year against the industry’s rise of 0.8%.
Bet Your Bucks on These Hot Stocks
Here we have highlighted three better-ranked stocks, namely Post Holdings (POST - Free Report) , Molson Coors Beverage Company (TAP - Free Report) and Coty Inc. (COTY - Free Report) .
Post Holdings, a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings suggests growth of 13% and 141.1% from the year-ago period’s actuals. POST has a trailing four-quarter earnings surprise of 59.6%, on average.
Molson Coors, which is the global manufacturer and seller of beer and other beverage products, currently flaunts a Zacks Rank #1. The expected EPS growth rate for three to five years is 7.3%.
The Zacks Consensus Estimate for Molson Coors’ current financial-year sales and earnings suggests growth of 9.3% and 23.4% from the year-ago period’s actuals. TAP has a trailing four-quarter earnings surprise of 34.2%, on average.
Coty, which manufactures, markets and distributes beauty products worldwide, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 18.8%.
The Zacks Consensus Estimate for Coty’s current fiscal-year sales and earnings suggests growth of 4.2% and 92.9% from the year-ago period’s actuals. COTY has a trailing four-quarter earnings surprise of 145%, on average.
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Hershey (HSY) Thrives on Innovation & Pricing Amid Cost Woes
The Hershey Company (HSY - Free Report) has been benefiting from its strategic pricing initiatives. The largest producer of quality chocolate products in the United States has been focused on strengthening its portfolio through prudent acquisitions and regular innovation.
Pricing & Capacity Expansion
In the second quarter of 2023, organic pricing contributed a substantial 7.7% to Hershey’s organic net sales growth. This positive trend was evident across various segments of the company. In the North America Confectionery unit, organic price contributed 8.4% to organic net sales growth. This strategic approach to pricing has proven to be a key driver of Hershey's overall growth strategy.
HSY's commitment to growth extends beyond acquisitions and into capacity expansion initiatives. The company's ongoing construction of a chocolate-making facility in Hershey, PA, underscores its dedication to increasing production capacity by nearly 5% in 2023. This strategic move positions Hershey to meet the growing demand, while optimizing its operational efficiency, output and service levels.
These efforts align with Hershey's broader strategy to continually enhance its network and ensure that it remains well-positioned to capture market opportunities.
Image Source: Zacks Investment Research
Buyouts & Innovation Add to Portfolio Strength
Hershey has been actively pursuing strategic acquisitions to bolster its portfolio strength and drive revenue growth. In April 2023, the company entered an agreement to acquire two production facilities from Weaver Popcorn Manufacturing. This renowned player in popcorn production, co-packing and co-manufacturer of Hershey's SkinnyPop brand presents a promising opportunity for Hershey.
Hershey's key brands such as Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher, Brookside, Sofit, and Ice Breakers have thrived due to investments in advertising, in-store displays, innovation and strategic marketing. The company consistently infuses innovation into its core brands to fulfill unmet consumer needs. Solid media marketing amplifies brand support, while seasonal portfolios tailored to consumer shopping trends further exemplify Hershey's strategic acumen.
Cost Escalation Hurts
Hershey has been grappling with the persistent issue of escalating selling, marketing and administrative expenses. In the second quarter of 2023, the company witnessed a 5.2% year-over-year increase in this metric, primarily driven by elevated levels of investments in media and capabilities. This was largely attributed to factors such as wage and benefits inflation, as well as investments in capabilities and technology.
The ongoing challenge in cost management has put pressure on Hershey's operational efficiency and profitability.
Wrapping Up
The above-mentioned upsides place Hershey well despite the cost-related hurdles. Management envisions net sales growth of 8% for 2023. Adjusted EPS is envisioned to increase 11-12% to $9.46-$9.54 in 2023.
Shares of this Zacks Rank #3 (Hold) company have declined 1% over the past year against the industry’s rise of 0.8%.
Bet Your Bucks on These Hot Stocks
Here we have highlighted three better-ranked stocks, namely Post Holdings (POST - Free Report) , Molson Coors Beverage Company (TAP - Free Report) and Coty Inc. (COTY - Free Report) .
Post Holdings, a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year sales and earnings suggests growth of 13% and 141.1% from the year-ago period’s actuals. POST has a trailing four-quarter earnings surprise of 59.6%, on average.
Molson Coors, which is the global manufacturer and seller of beer and other beverage products, currently flaunts a Zacks Rank #1. The expected EPS growth rate for three to five years is 7.3%.
The Zacks Consensus Estimate for Molson Coors’ current financial-year sales and earnings suggests growth of 9.3% and 23.4% from the year-ago period’s actuals. TAP has a trailing four-quarter earnings surprise of 34.2%, on average.
Coty, which manufactures, markets and distributes beauty products worldwide, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 18.8%.
The Zacks Consensus Estimate for Coty’s current fiscal-year sales and earnings suggests growth of 4.2% and 92.9% from the year-ago period’s actuals. COTY has a trailing four-quarter earnings surprise of 145%, on average.