Hershey's Sluggish Sales and Profits Spook Investors, but Wide Moat Unwavering; Shares a Bargain
On the surface, Hershey's third-quarter results left a sour taste, with organic sales up a measly 0.5% (due to a 150-basis-point hit from lower prices) and adjusted gross margins down 130 basis points to 44%. Even though adjusted operating margins ticked up 60 basis points to 22.6%, this improvement resulted from a high-teens pullback in advertising and marketing spend, which we've historically viewed as a crucial element to back the firm's intangible assets. But we don’t contend that this bespe...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.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
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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