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Hershey Co (HSY): A Sweet Stock for Investors

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Hershey Co (NYSE:HSY) is the largest producer of quality chocolate in the United States and has operations throughout the world. Clocking annual turnover over $6.5 billion in 2012, Hershey Co (NYSE:HSY) produces confectionery products under more than 85 brand names, including iconic brands like Hershey’s, Kit Kat, Hershey’s Kisses, Hershey’s Bliss, Jolly Rancher, Ice Breakers and Twizzlers.

The Hershey Company (NYSE:HSY)

Stock-price performance

Looking at the annualized return of Hershey, the stock provided investors a return of 23%, higher than the industry average of 15%. Hershey Co (NYSE:HSY) historically has been paying dividends well and currently sports a dividend yield of 1.9%. The high return of the stock in terms of both price appreciation and dividends makes it a darling for investors. However, Hershey has $1.9 billion in total debt on its balance sheet, which may be a point of concern in the future.

Future growth expectations high

Hershey Co (NYSE:HSY) recently released its full-year 2013 financial expectations. Its diluted earnings per share (EPS) for 2013 is expected to be in the range of $3.50 to $3.60, which is an increase of 10% over 2012. This is due to reductions in its business realignment and impairment charges. Hershey is aiming for expansion in key international markets like China, Brazil and Mexico, which is in addition to its strong competitive advantage in the United States and Canada.

Hershey Co (NYSE:HSY) expects 2013 net sales growth of 5% to 7% with an annual sales of $10 billion in the next two-to-three years primarily driven by innovation in distribution channels, core brand volume growth, the U.S. launch of the Brookside product line and other chocolates such as Kit Kat mini’s and bite-sized Twizzlers. Moreover, the company aims to diversify its portfolio with new product lines like Hershey Co (NYSE:HSY)’s Kisses Deluxe in markets like China.


Mondelez International Inc (NASDAQ:MDLZ) is a multinational confectionery chain consisting of the brands of the former Kraft Foods Group Inc (NASDAQ:KRFT). Some of the Mondelez International Inc (NASDAQ:MDLZ) brands are Cadbury, Oreo, Trident gum and Nabisco-branded chocolates. For the last three months, Mondelez’s stock has been a better performer than most of its peers. With a market cap of $53 billion, Mondelez International Inc (NASDAQ:MDLZ) brands are quite popular, just like Hershey, with a wide variety of product lines tweaked to suit the tastes of the locals. The recent sales figures took a hit for the company and were down 3% to 4% due to capacity constraints, lower coffee prices and currency headwinds.

However, the emerging market exposure and the double digit growth especially in Brazil, Russia, China and India (BRIC) markets is expected to propel the company’s growth in the long term. Also the increase in advertising expenditures will help Mondelez tap the growing confectionery market and grow its share. With these long-term objectives in place, the company is looking to achieve a healthy growth rate of 12% to 13% in the next five years.

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