Summary
- The Hershey Company sells confectionary products, primarily in the US. The brands under their umbrella include Hershey’s, Reese’s, and Kit Kat.
- The business has navigated economic conditions extremely well, growing revenue by over 5% in 2022 with only a <2% decline in GPM.
- We have observed evidence to suggest the market is transitioning towards healthy / natural foods, which HSY has already made moves to capitalize on.
- HSY’s financials look extremely attractive, marrying growth with free cash flow, something competitors have not replicated.
- Our only issue with the business is that our valuation suggests the business is currently trading at its fair value, with limited upside. Based on this alone, we consider the stock a hold.
Company overview:
The Hershey Company (NYSE:HSY) engages in the manufacture and sale of confectionery products and pantry items internationally. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products.
The company provides its products primarily under the Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily’s, SkinnyPop, Pirates Booty, Paqui, Dot’s Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands.
HSY is a confectionery giant, leading the way in the US market. The business only generates c.8% of its sales from its international segment, choosing to focus primarily on the US.
