Hershey Sweetens 4Q Sales Gains, Poised to Bolster Long-Term Profits; Shares Fairly Valued
We don’t anticipate a material change to our $106 fair value estimate following wide-moat Hershey’s fourth-quarter results. While sales popped nearly 3% (an acceleration from the underlying growth of just 1.7% reported in the third quarter), adjusted gross margins slipped 50 basis points to 44.5% and adjusted operating margins contracted 70 basis points to 19.2%. In light of the erosion in profitability, management seems laser-focused on driving improvement, alluding to plans to ramp up its cost...Hershey is engaged in the production of chocolate and non-chocolate confectionery. The company's segments are: North America, which is responsible for the company's chocolate and non-chocolate confectionery market position, and its grocery and snacks market positions, in the United States and Canada; and International and Other, in which the company has operations and manufactures product in China, Mexico, Brazil, India and Malaysia, and also distributes and sells confectionery products in export markets of Asia, Latin America, Middle East, Europe, Africa and other regions. The company's product offerings include chocolate and non-chocolate confectionery products, gum and mint refreshment products, snack and pantry items.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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