HERSHEY CO/THE (HSY)

US4278661081 - Common Stock

195.205  +1.5 (+0.77%)

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to HSY. HSY was compared to 91 industry peers in the Food Products industry. While HSY has a great profitability rating, there are some minor concerns on its financial health. HSY has a correct valuation and a medium growth rate.



9

1. Profitability

1.1 Basic Checks

In the past year HSY was profitable.
HSY had a positive operating cash flow in the past year.
HSY had positive earnings in each of the past 5 years.
In the past 5 years HSY always reported a positive cash flow from operatings.

1.2 Ratios

The Return On Assets of HSY (15.64%) is better than 95.60% of its industry peers.
The Return On Equity of HSY (45.42%) is better than 98.90% of its industry peers.
With an excellent Return On Invested Capital value of 22.87%, HSY belongs to the best of the industry, outperforming 97.80% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for HSY is significantly above the industry average of 7.96%.
The last Return On Invested Capital (22.87%) for HSY is above the 3 year average (21.99%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 15.64%
ROE 45.42%
ROIC 22.87%
ROA(3y)14.95%
ROA(5y)14.6%
ROE(3y)49.63%
ROE(5y)54.45%
ROIC(3y)21.99%
ROIC(5y)22.23%

1.3 Margins

HSY has a Profit Margin of 16.68%. This is amongst the best in the industry. HSY outperforms 90.11% of its industry peers.
In the last couple of years the Profit Margin of HSY has grown nicely.
Looking at the Operating Margin, with a value of 22.97%, HSY belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
In the last couple of years the Operating Margin of HSY has remained more or less at the same level.
The Gross Margin of HSY (44.77%) is better than 96.70% of its industry peers.
In the last couple of years the Gross Margin of HSY has remained more or less at the same level.
Industry RankSector Rank
OM 22.97%
PM (TTM) 16.68%
GM 44.77%
OM growth 3Y0.85%
OM growth 5Y0.61%
PM growth 3Y2.04%
PM growth 5Y1.98%
GM growth 3Y-0.5%
GM growth 5Y-0.56%

5

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), HSY is creating value.
Compared to 1 year ago, HSY has less shares outstanding
HSY has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, HSY has an improved debt to assets ratio.

2.2 Solvency

An Altman-Z score of 5.21 indicates that HSY is not in any danger for bankruptcy at the moment.
HSY has a Altman-Z score of 5.21. This is amongst the best in the industry. HSY outperforms 85.71% of its industry peers.
The Debt to FCF ratio of HSY is 3.10, which is a good value as it means it would take HSY, 3.10 years of fcf income to pay off all of its debts.
HSY has a better Debt to FCF ratio (3.10) than 79.12% of its industry peers.
A Debt/Equity ratio of 1.10 is on the high side and indicates that HSY has dependencies on debt financing.
HSY has a Debt to Equity ratio of 1.10. This is in the lower half of the industry: HSY underperforms 74.73% of its industry peers.
Industry RankSector Rank
Debt/Equity 1.1
Debt/FCF 3.1
Altman-Z 5.21
ROIC/WACC2.78
WACC8.23%

2.3 Liquidity

A Current Ratio of 0.97 indicates that HSY may have some problems paying its short term obligations.
HSY's Current ratio of 0.97 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 0.52 indicates that HSY may have some problems paying its short term obligations.
HSY has a worse Quick ratio (0.52) than 76.92% of its industry peers.
Industry RankSector Rank
Current Ratio 0.97
Quick Ratio 0.52

4

3. Growth

3.1 Past

HSY shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.56%, which is quite good.
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.
Looking at the last year, HSY shows a small growth in Revenue. The Revenue has grown by 7.16% in the last year.
HSY shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.46% yearly.
EPS 1Y (TTM)12.56%
EPS 3Y15.09%
EPS 5Y12.34%
EPS growth Q2Q0%
Revenue 1Y (TTM)7.16%
Revenue growth 3Y11.06%
Revenue growth 5Y7.46%
Revenue growth Q2Q0.18%

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 5.12% on average per year.
HSY is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.27% yearly.
EPS Next Y1.03%
EPS Next 2Y3.7%
EPS Next 3Y4.64%
EPS Next 5Y5.12%
Revenue Next Year2.21%
Revenue Next 2Y2.65%
Revenue Next 3Y2.8%
Revenue Next 5Y4.27%

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

Based on the Price/Earnings ratio of 20.36, the valuation of HSY can be described as rather expensive.
69.23% of the companies in the same industry are more expensive than HSY, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 26.42, HSY is valued a bit cheaper.
A Price/Forward Earnings ratio of 20.15 indicates a rather expensive valuation of HSY.
Based on the Price/Forward Earnings ratio, HSY is valued a bit cheaper than the industry average as 67.03% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.74, HSY is valued at the same level.
Industry RankSector Rank
PE 20.36
Fwd PE 20.15

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, HSY is valued a bit cheaper than the industry average as 60.44% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HSY indicates a somewhat cheap valuation: HSY is cheaper than 61.54% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 25.65
EV/EBITDA 14.48

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
HSY has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)19.81
PEG (5Y)1.65
EPS Next 2Y3.7%
EPS Next 3Y4.64%

6

5. Dividend

5.1 Amount

HSY has a Yearly Dividend Yield of 2.75%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.36, HSY pays a bit more dividend than its industry peers.
HSY's Dividend Yield is comparable with the S&P500 average which is at 2.34.
Industry RankSector Rank
Dividend Yield 2.75%

5.2 History

The dividend of HSY is nicely growing with an annual growth rate of 10.20%!
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)10.2%
Div Incr Years14
Div Non Decr Years18

5.3 Sustainability

HSY pays out 47.75% of its income as dividend. This is a bit on the high side, but may be sustainable.
HSY's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP47.75%
EPS Next 2Y3.7%
EPS Next 3Y4.64%

HERSHEY CO/THE

NYSE:HSY (3/28/2024, 10:03:10 AM)

195.205

+1.5 (+0.77%)

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 Cap39.81B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 2.75%
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)
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Revenue beat(2)
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Revenue beat(16)
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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 20.36
Fwd PE 20.15
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)19.81
PEG (5Y)1.65
Profitability
Industry RankSector Rank
ROA 15.64%
ROE 45.42%
ROCE
ROIC
ROICexc
ROICexgc
OM 22.97%
PM (TTM) 16.68%
GM 44.77%
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 Turnover0.94
Health
Industry RankSector Rank
Debt/Equity 1.1
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 0.97
Quick Ratio 0.52
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)
Growth
EPS 1Y (TTM)12.56%
EPS 3Y15.09%
EPS 5Y
EPS growth Q2Q
EPS Next Y1.03%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)7.16%
Revenue growth 3Y11.06%
Revenue growth 5Y
Revenue growth 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