Hershey Stock Faces Pressure Amid Cocoa Price Surge

Hershey investors face challenges as cocoa prices rise, but the company's revenue has shown resilience. A potential buying opportunity emerges for shareholders.

Date: 20-02-2025

AI Rating: 7

Revenue Growth
Hershey reported 2024 revenue of $11.2 billion, marking an increase of less than 1% from the previous year. While revenue has not dropped, it suggests that higher prices may be leading to decreased product sales, indicating challenging conditions.

Dividend Yield
The company declared its 380th consecutive quarterly dividend, providing a significant annual dividend income of $5.48 per share, resulting in a dividend yield of 3.42%. This yield is notably higher than the S&P 500 average, appealing strongly to income investors.

Valuation
The current P/E ratio has fallen below 15, a level not seen since 2000, while the price-to-sales ratio of 3.3 is near multiyear lows. Such low valuation metrics create an attractive entry point for potential buyers who may find value in investing at this price level.

Despite cocoa supply challenges and rising prices, Hershey's ability to maintain revenue growth during this time signifies a strong brand presence. The company’s high dividend yield suggests ongoing shareholder value, and low valuation metrics provide an opportunity for rebound as conditions improve in the market.

Stocks: HSY