August 7, 2018

HSY – Market expectations are for Uniform ROA to plateau at current levels, but management is concerned about new strategies and future margins


  • The Hershey Company (HSY:USA)currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 20.8 Uniform P/E, implying somewhat bullish expectations for the firm. However, management is concerned about their SKU reduction and tax credit strategies, and about their ability to improve margins by reducing costs
  • Specifically, management appears concerned about their ability to reduce costs to improve future margins, and to address issues facing cocoa-growing communities. Moreover, they may lack confidence in their decision to shift their focus from advertising to trade, and in their ability to work collaboratively with their retail partners. Also, they may lack confidence in their SKU reduction program and their investment tax credit strategy
To read this Embedded Expectations Analysis report in its entirety, please log into the Valens Research web app. If you don't have an account, you can sign up for the 30-day trial.