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Hershey Targets $400M in Cost Savings: Where Does It Stand Now?
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Key Takeaways
Hershey now targets $400M in savings under its expanded Triple A transformation program.
Smart Complexity drives cost cuts through automation, packaging simplification and efficiencies.
HSY expects pricing, procurement and productivity moves to restore margins in 2026.
The Hershey Company ((HSY - Free Report) ) is sharpening focus on efficiency as it raises the bar for the Advancing Automation and Agility (Triple A) transformation program. In the second-quarter 2025 update, the company said it now expects $150 million in net savings this year, up from the earlier $125 million forecast, and has lifted the three-year program target to $400 million from $350 million. The savings are spread across the cost of goods sold and selling, marketing and administrative expenses.
A central pillar of this strategy is Smart Complexity, an initiative designed to simplify packaging and product assortments, streamline manufacturing and leverage technology-enabled automation. The leadership emphasized that these measures not only cut costs but also create efficiencies that benefit both the company and its retail partners.
With cocoa inflation and tariffs weighing on profitability, Hershey’s margins remain under strain. Adjusted gross margin slipped 510 basis points (bps) to 38.1% in the second quarter of 2025. The expanded savings pipeline is meant to help offset these pressures and support margin recovery over time. Management noted that, taken together, pricing actions, procurement strategies and productivity initiatives could restore more than 500 bps of adjusted gross margin in 2026.
For now, Hershey’s execution on the cost front is moving ahead of schedule, with visible gains in manufacturing and administrative efficiency. The raised target reflects confidence that its productivity engine can deliver more than initially anticipated. Even with commodity volatility creating headwinds, the company’s progress signals a stronger foundation for restoring margins and sustaining operational discipline.
Hershey’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have lost 2.3% in the past month compared with the industry’s 1.5% decline. HSY has also underperformed the broader Consumer Staples sector and the S&P 500 index’s growth of 1.7% and 2%, respectively, during the same period.
HSY Stock's Past Month Performance
Image Source: Zacks Investment Research
Is HSY a Value Play Stock?
Hershey currently trades at a forward 12-month P/E ratio of 29.09 compared with the industry average of 23.49 and the sector’s 17.12. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.
The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 3.1% and 11%, respectively, from the prior-year levels. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.
The Chefs' Warehouse, Inc. ((CHEF - Free Report) ) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently sports a Zacks Rank of 1. CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.6% and 19.1%, respectively, from the prior-year levels.
Laird Superfood, Inc. ((LSF - Free Report) ) manufactures and markets plant-based, natural and functional food in the United States. It has a Zacks Rank #2 (Buy) at present. LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.
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Hershey Targets $400M in Cost Savings: Where Does It Stand Now?
Key Takeaways
The Hershey Company ((HSY - Free Report) ) is sharpening focus on efficiency as it raises the bar for the Advancing Automation and Agility (Triple A) transformation program. In the second-quarter 2025 update, the company said it now expects $150 million in net savings this year, up from the earlier $125 million forecast, and has lifted the three-year program target to $400 million from $350 million. The savings are spread across the cost of goods sold and selling, marketing and administrative expenses.
A central pillar of this strategy is Smart Complexity, an initiative designed to simplify packaging and product assortments, streamline manufacturing and leverage technology-enabled automation. The leadership emphasized that these measures not only cut costs but also create efficiencies that benefit both the company and its retail partners.
With cocoa inflation and tariffs weighing on profitability, Hershey’s margins remain under strain. Adjusted gross margin slipped 510 basis points (bps) to 38.1% in the second quarter of 2025. The expanded savings pipeline is meant to help offset these pressures and support margin recovery over time. Management noted that, taken together, pricing actions, procurement strategies and productivity initiatives could restore more than 500 bps of adjusted gross margin in 2026.
For now, Hershey’s execution on the cost front is moving ahead of schedule, with visible gains in manufacturing and administrative efficiency. The raised target reflects confidence that its productivity engine can deliver more than initially anticipated. Even with commodity volatility creating headwinds, the company’s progress signals a stronger foundation for restoring margins and sustaining operational discipline.
Hershey’s Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have lost 2.3% in the past month compared with the industry’s 1.5% decline. HSY has also underperformed the broader Consumer Staples sector and the S&P 500 index’s growth of 1.7% and 2%, respectively, during the same period.
HSY Stock's Past Month Performance
Image Source: Zacks Investment Research
Is HSY a Value Play Stock?
Hershey currently trades at a forward 12-month P/E ratio of 29.09 compared with the industry average of 23.49 and the sector’s 17.12. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.
HSY Valuation Picture
Image Source: Zacks Investment Research
Stocks to Consider
Post Holdings, Inc. ((POST - Free Report) ) operates as a consumer-packaged goods holding company in the United States and internationally. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Post Holdings’ current fiscal-year sales and earnings indicates growth of 3.1% and 11%, respectively, from the prior-year levels. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average.
The Chefs' Warehouse, Inc. ((CHEF - Free Report) ) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. It currently sports a Zacks Rank of 1. CHEF delivered a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings indicates growth of 6.6% and 19.1%, respectively, from the prior-year levels.
Laird Superfood, Inc. ((LSF - Free Report) ) manufactures and markets plant-based, natural and functional food in the United States. It has a Zacks Rank #2 (Buy) at present. LSF delivered a trailing four-quarter earnings surprise of 11.3%, on average.
The Zacks Consensus Estimate for Laird Superfood’s current fiscal-year sales and earnings indicates growth of 21% and 23.8%, respectively, from the prior-year levels.