HSY - Embedded Expectations Analysis - 2020 04 22
ï€ The Hershey Company (HSY:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their pricing strategy, growth, and Kraveï€ Specifically, management may lack confidence in their ability to sustain net price realization improvements, mitigate FX headwinds, and continue to gain candy, mint, and gum category share. In addition, they may lack confidence in their ability to sustain solid snack portfolio growth and Take5's repeat purchase strength. Furthermore, they may have concerns about their operating leverage and the impact of COVID-19, and they may be downplaying concerns about the drag of Krave on total consumption and enterprise resource planning constraints. Finally, they may be overstating the importance of their Krave acquisition and the potential of their new trade model in Mexico
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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