HERSHEY CO/THE (HSY)

US4278661081 - Common Stock

177.175  -2.94 (-1.63%)

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to HSY. HSY was compared to 92 industry peers in the Food Products industry. HSY scores excellent on profitability, but there are some minor concerns on its financial health. HSY is valued correctly, but it does not seem to be growing.



9

1. Profitability

1.1 Basic Checks

HSY had positive earnings in the past year.
HSY had a positive operating cash flow in the past year.
HSY had positive earnings in each of the past 5 years.
Each year in the past 5 years HSY had a positive operating cash flow.

1.2 Ratios

Looking at the Return On Assets, with a value of 14.87%, HSY belongs to the top of the industry, outperforming 94.51% of the companies in the same industry.
The Return On Equity of HSY (46.04%) is better than 98.90% of its industry peers.
Looking at the Return On Invested Capital, with a value of 22.65%, HSY belongs to the top of the industry, outperforming 98.90% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for HSY is significantly above the industry average of 8.90%.
The 3 year average ROIC (21.99%) for HSY is below the current ROIC(22.65%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 14.87%
ROE 46.04%
ROIC 22.65%
ROA(3y)14.95%
ROA(5y)14.6%
ROE(3y)49.62%
ROE(5y)54.44%
ROIC(3y)21.99%
ROIC(5y)22.23%

1.3 Margins

Looking at the Profit Margin, with a value of 16.76%, HSY belongs to the top of the industry, outperforming 95.60% of the companies in the same industry.
HSY's Profit Margin has improved in the last couple of years.
The Operating Margin of HSY (23.62%) is better than 98.90% of its industry peers.
HSY's Operating Margin has been stable in the last couple of years.
HSY has a Gross Margin of 45.43%. This is amongst the best in the industry. HSY outperforms 96.70% of its industry peers.
HSY's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 23.62%
PM (TTM) 16.76%
GM 45.43%
OM growth 3Y0.84%
OM growth 5Y0.6%
PM growth 3Y2.05%
PM growth 5Y1.99%
GM growth 3Y-0.5%
GM growth 5Y-0.56%

5

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so HSY is creating value.
HSY has less shares outstanding than it did 1 year ago.
The number of shares outstanding for HSY has been reduced compared to 5 years ago.
The debt/assets ratio for HSY has been reduced compared to a year ago.

2.2 Solvency

HSY has an Altman-Z score of 4.69. This indicates that HSY is financially healthy and has little risk of bankruptcy at the moment.
HSY's Altman-Z score of 4.69 is amongst the best of the industry. HSY outperforms 86.81% of its industry peers.
The Debt to FCF ratio of HSY is 3.91, which is a good value as it means it would take HSY, 3.91 years of fcf income to pay off all of its debts.
HSY's Debt to FCF ratio of 3.91 is fine compared to the rest of the industry. HSY outperforms 73.63% of its industry peers.
HSY has a Debt/Equity ratio of 1.20. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 1.20, HSY is not doing good in the industry: 76.92% of the companies in the same industry are doing better.
Industry RankSector Rank
Debt/Equity 1.2
Debt/FCF 3.91
Altman-Z 4.69
ROIC/WACC2.75
WACC8.24%

2.3 Liquidity

A Current Ratio of 0.86 indicates that HSY may have some problems paying its short term obligations.
HSY's Current ratio of 0.86 is on the low side compared to the rest of the industry. HSY is outperformed by 76.92% of its industry peers.
A Quick Ratio of 0.48 indicates that HSY may have some problems paying its short term obligations.
The Quick ratio of HSY (0.48) is worse than 79.12% of its industry peers.
Industry RankSector Rank
Current Ratio 0.86
Quick Ratio 0.48

3

3. Growth

3.1 Past

HSY shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.18%.
Measured over the past years, HSY shows a quite strong growth in Earnings Per Share. The EPS has been growing by 12.34% on average per year.
The Revenue has been growing slightly by 1.44% in the past year.
The Revenue has been growing slightly by 7.46% on average over the past years.
EPS 1Y (TTM)-2.18%
EPS 3Y15.09%
EPS 5Y12.34%
EPS Q2Q%-36.82%
Revenue 1Y (TTM)1.44%
Revenue growth 3Y11.06%
Revenue growth 5Y7.46%
Sales Q2Q%-16.7%

3.2 Future

Based on estimates for the next years, HSY will show a small growth in Earnings Per Share. The EPS will grow by 4.22% on average per year.
Based on estimates for the next years, HSY will show a small growth in Revenue. The Revenue will grow by 3.45% on average per year.
EPS Next Y-0.91%
EPS Next 2Y-2.33%
EPS Next 3Y1.08%
EPS Next 5Y4.22%
Revenue Next Year0.68%
Revenue Next 2Y1.79%
Revenue Next 3Y2.08%
Revenue Next 5Y3.45%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

4

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 19.77, which indicates a rather expensive current valuation of HSY.
63.74% of the companies in the same industry are more expensive than HSY, based on the Price/Earnings ratio.
HSY's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.91.
With a Price/Forward Earnings ratio of 19.37, HSY is valued on the expensive side.
HSY's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. HSY is cheaper than 64.84% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.57. HSY is around the same levels.
Industry RankSector Rank
PE 19.77
Fwd PE 19.37

4.2 Price Multiples

HSY's Enterprise Value to EBITDA ratio is in line with the industry average.
HSY's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. HSY is cheaper than 60.44% of the companies in the same industry.
Industry RankSector Rank
P/FCF 25.9
EV/EBITDA 13.18

4.3 Compensation for Growth

HSY has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.6
EPS Next 2Y-2.33%
EPS Next 3Y1.08%

6

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 3.09%, HSY has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.72, HSY pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.26, HSY pays a bit more dividend than the S&P500 average.
Industry RankSector Rank
Dividend Yield 3.09%

5.2 History

On average, the dividend of HSY grows each year by 10.18%, which is quite nice.
HSY has been paying a dividend for at least 10 years, so it has a reliable track record.
HSY has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)10.18%
Div Incr Years14
Div Non Decr Years33

5.3 Sustainability

55.23% of the earnings are spent on dividend by HSY. This is a bit on the high side, but may be sustainable.
The dividend of HSY is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP55.23%
EPS Next 2Y-2.33%
EPS Next 3Y1.08%

HERSHEY CO/THE

NYSE:HSY (11/6/2024, 3:56:02 PM)

177.175

-2.94 (-1.63%)

Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap35.84B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 3.09%
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
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EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
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EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
Industry RankSector Rank
PE 19.77
Fwd PE 19.37
P/S
P/FCF
P/OCF
P/B
P/tB
EV/EBITDA
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)N/A
PEG (5Y)1.6
Profitability
Industry RankSector Rank
ROA 14.87%
ROE 46.04%
ROCE
ROIC
ROICexc
ROICexgc
OM 23.62%
PM (TTM) 16.76%
GM 45.43%
FCFM
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.89
Health
Industry RankSector Rank
Debt/Equity 1.2
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 0.86
Quick Ratio 0.48
Altman-Z
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)-2.18%
EPS 3Y15.09%
EPS 5Y
EPS Q2Q%
EPS Next Y-0.91%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)1.44%
Revenue growth 3Y11.06%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y