Hey, chocolate lovers! Do you have a sweet tooth for investing as well? If so, you might be wondering whether The Hershey Company (HSY) is a good or bad stock to buy right now. Well, I'm here to give you some insights on this iconic confectionery giant and its prospects for the future. This isn't advice. It's my thoughts and I do have a position in HSY.
The Hershey Company is one of the largest and oldest chocolate manufacturers in the world, with a history dating back to 1894. It produces and sells a variety of products, such as chocolate bars, kisses, Reese's peanut butter cups, Kit Kat, Twizzlers, Jolly Rancher, and more. It also owns some salty snacks brands, such as SkinnyPop and Pirate's Booty. The company operates mainly in North America, but also has a presence in international markets.
The Hershey Company has been performing well in recent years, despite the challenges posed by the COVID-19 pandemic. In 2023, the company reported revenue of $11.24 billion, up 7.9% from 2022, and earnings of $9.52 per share, up 11.7% from 2022. The company also increased its dividend by 10% to $4.77 per share, yielding 2.56% at the current stock price of $186.44 (as of Dec 29, 2023).
The company attributed its growth to strong consumer demand for its products, especially in the e-commerce channel, which grew by 40% in 2023. The company also benefited from its innovation strategy, launching new products such as Hershey's Kisses Lava Cake and Reese's Big Cup with Pretzels. The company also invested in expanding its production capacity and improving its supply chain efficiency.
The Hershey Company faces some headwinds, however, such as rising commodity costs, especially for cocoa and sugar, which could squeeze its profit margins. The company also faces intense competition from other confectionery players, such as Mars, Mondelez, Nestle, and Ferrero. The company also has to deal with changing consumer preferences and health concerns, which could affect the demand for its products.
So, is Hershey stock a good or bad investment right now? Well, that depends on your risk appetite and time horizon. According to 16 stock analysts, the average 12-month stock price forecast for Hershey stock is $234.81, which predicts an increase of 29.22%. The lowest target is $180 and the highest is $285. On average, analysts rate Hershey stock as a hold.
If you are looking for a stable and reliable dividend payer with a strong brand portfolio and loyal customer base, Hershey stock might be a good option for you. The company has a long history of increasing its dividend every year since 1974 and has a payout ratio of 50%, which means it can sustain its dividend even if earnings decline. The company also has a solid balance sheet, with a debt-to-equity ratio of 0.33 and an interest coverage ratio of 20.
If you are looking for a high-growth or undervalued stock with a lot of upside potential, Hershey stock might not be the best choice for you. The company has a relatively high valuation compared to its peers, with a trailing price-to-earnings ratio of 20.11 and a forward price-to-earnings ratio of 18.63. The company also has a moderate growth outlook, with analysts expecting its earnings to grow by 5.1% in 2024 and by 8.36% annually over the next five years.
Ultimately, the decision to buy or sell Hershey stock depends on your own goals and expectations. As always, do your own research before making any investment decisions and consult a professional financial advisor if needed.
I hope you enjoyed this blog post about Hershey stock. If you did, please share it with your friends and family who might be interested in investing in chocolate. And don't forget to treat yourself to some delicious Hershey products once in a while!
Happy investing!