2024-03-14 16:00:00 ET
Summary
- Hershey remains a tempting deal, thanks to the management's competent cost optimizations as raw material prices rise and the consumer spending habit shifts.
- While the FY2024 guidance may be underwhelming, the same has been offered by MDLZ and PEP, implying that the headwinds are similarly shared by multiple consumer staple companies.
- With the HSY management already guiding an improved outlook by H2'24 and 2025, we believe that the stock's discounted valuations offer interested investors with an attractive entry point.
- Combined with the expanded forward dividend yield, we are reiterating our Buy rating.
We previously covered Hershey Company ( HSY ) in November 2023, discussing its near-term headwinds as the inflation rose with record high cocoa/ sugar spot prices, worsened by the declining sales volumes as more consumers chose private label confectionaries.
However, we maintained our optimism that it remained well poised for growth, especially given the aggressive M&A activities over the past few years, with salty snacks delivering double-digit growth, resulting in our Buy rating then....
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Hershey's Discounted Valuations Offer Tempting Upside Potential And Yields