Hershey’s stock dips as high cocoa prices eat into profit

By Steve Gelsi

Chocolate maker’s stock drops as its adjusted earnings miss analyst estimates

This article has been updated to provide correct FactSet consensus estimates for Hershey’s third-quarter profit and revenue.

Hershey Co.’s stock fell more than 2% Thursday after the chocolate giant’s third-quarter profit and revenue fell short of analyst estimates, with the company blaming market costs for its raw materials.

Hershey (HSY) cited “historically high cocoa prices and a challenging consumer environment,” but said it remains “laser-focused on controlling what we can and are acting with immediacy to deliver value to customers, consumers and shareholders.”

D.A. Davison analyst Brian Holland reiterated a neutral rating on Hershey and said underlying demand for its products remains below expectations.

“Beyond cocoa, the combination of weaker snacking trends and reinvestment needs figures to pressure both the top and bottom line in the near to intermediate term,” Holland said.

It remains to be seen where the bottom of the cycle is for Hershey. Although the stock’s valuation may be closer to trough levels, this alone “is not compelling enough to make us more constructive here,” Holland added.

Hershey’s profit for the three months ending Sept. 29 fell to $446 million or $2.20 a share, from $518.6 million or $2.52 a share in the year-ago quarter.

The company’s adjusted third-quarter profit of $2.34 a share missed the FactSet analyst consensus estimate of $2.56 a share.

Hershey’s third-quarter revenue fell to $2.99 billion from $3.03 billion in the year-ago quarter, while analysts expected revenue $3.08 billion.

Looking ahead, the company now expects full-year 2024 adjusted earnings of $9.00 a share to $9.10 a share, down from $9.59 a share in 2023. That’s below the analyst estimate of $9.41 a share.

Prior to Thursday’s moves, Hershey’s stock had fallen 5.2% in 2024, while the S&P 500 SPX had risen by 24.3%.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

  (END) Dow Jones Newswires

  11-07-24 1552ET
Copyright (c) 2024 Dow Jones & Company, Inc.