Attractive P/E Ratio
Reasonable Price-to-Sales Ratio
Strong Return on Equity
Solid Profit Margins
Strong Interest Coverage
Manageable Debt Levels
🏆 Strong Market Position
🔒 Effective Risk Management
🚀 Innovation Potential
📈 Balanced Growth Expectations
High P/FCF Ratio
Elevated EV/EBITDA
Moderate Operating Profit Margin
Liquidity Concerns
📉 Market Share Decline in Everyday Chocolate
⚠️ Competitive Pressures
Overall, Hershey demonstrates strong business quality with effective risk management and a solid market position, though it faces challenges in everyday chocolate and competitive pressures. Future prospects are bolstered by innovation and a focus on balanced growth, but competitive dynamics could impact performance.
Analysis Date: February 6, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$417.19
Current Market Price: $162.29
IV/P Ratio: 2.57x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
61.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for HSY
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (14.79)
P/B ratio ≤ 1.5 (6.97)
Current ratio ≥ 2.0 (0.96x)
Long-term debt < Net current assets (-20.55x)
Margin of safety (61.0%)
HSY does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity of 52.15% indicates that the company is highly efficient at generating profit from shareholders' equity.
A net profit margin of 19.83% demonstrates that the company retains a significant portion of revenue as profit, showcasing effective cost management.
An operating profit margin of 24.93% is decent but may indicate room for improvement in operational efficiency.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
52.15%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
6.15%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
45.99%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
19.83%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The interest coverage ratio of 16.23 indicates that the company can comfortably meet its interest obligations, reflecting strong financial health.
A debt-to-equity ratio of 1.16 suggests that the company uses a balanced approach to leverage, which is not excessively high.
Current and quick ratios below 1 (0.96 and 0.64 respectively) indicate potential liquidity issues, suggesting the company may struggle to cover short-term liabilities.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
1.16x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
0.96x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Hershey maintains a solid competitive position in the confectionery market, with a portfolio that includes iconic brands. The company reported significant improvements in its sweets and seasonal segments, demonstrating its ability to adapt to consumer trends.
The company has a strong hedging strategy for cocoa prices, which allows it to mitigate risks associated with commodity price volatility. This strategy provides a buffer against market fluctuations.
Hershey has experienced market share declines in everyday chocolate, which poses a risk to its overall growth. This could be attributed to increased competition and consumer shifts towards healthier options.
Hershey is actively innovating its product offerings, particularly in the non-chocolate segment. The company has launched new products like Shaq-a-licious Gummies and has plans for more innovations, which can drive future sales growth.
Management is optimistic about achieving balanced top and bottom-line growth by 2026, leveraging pricing strategies and operational efficiencies to counteract cost pressures.
The company faces heightened competitive activity, particularly in its international segments, which may limit growth potential in these markets. Brazil and Mexico have shown intense promotional activity from competitors.