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HSY Stock Alert: What to Know About Hershey’s Halloween Candy Shortage Warning


  • Hershey’s (HSY) warned of a Halloween candy shortage.
  • It prioritized current sales during the last quarter rather than storing up production.
  • The value stock has delivered 30% annual returns the last two years.
HSY stock - HSY Stock Alert: What to Know About Hershey’s Halloween Candy Shortage Warning

Source: George Sheldon / Shutterstock.com

Hershey’s (NYSE:HSY) stock rose almost 2.5% July 29 after it announced that it may come up short on Halloween candy.

But that wasn’t why investors were snapping up the stock, which is up 19% in a year where the S&P 500 is down 14%. Investors buy results, and Hershey’s has delivered them.

For the quarter ending July 3 Hershey’s reported net income of $315.5 million, $1.53/share fully diluted, on revenue of $2.37 billion. The company also raised its quarterly dividend by 15%, to $1.036 per share.

HSY Stock: Tasty Numbers

The new dividend raises the stock’s yield to over 1.8%. The company’s market capitalization is about $48.5 billion and the price to earnings ratio is now over 29. Until this year returns on Hershey’s had matched those of the market. It has been exceeding market returns since January. It has delivered a nearly 30% return on investment each of the last two years, when dividends and stock gains are combined.

But it’s the looming shortage that had reporters talking. The company blamed supply chain problems and capacity challenges. The company said it decided to replenish shelves now rather than focus on holiday production. As to current production, it’s all hands on deck, said CEO Steve Voskuil.

Things may not be as frightening as they seem. West Africa countries expect a good cocoa bean harvest in September. Hershey’s recent price increases are also sticking, with revenue for the quarter up 19%. Best of all sales of salty snacks doubled, thanks to last year’s acquisition of Dot’s Homestyle Pretzels for $1.2 billion.

What Happens Now?

Hershey’s is rated as only a “moderate buy” at Tipranks but none of its five analysts are saying sell. It’s a value stock and, if there aren’t enough Hershey’s at the store this October, let ‘em eat Nestle (OTCMKTS:NSRGY). Nestle should be hungry for your money, NSRGY stock is down 13% in 2022. Or consider some Oreos from Mondelez (NASDAQ:MDLZ), whose stock is also down on the year.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/hsy-stock-alert-what-to-know-about-hersheys-halloween-candy-shortage-warning/.

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