Don't Sweat Hershey's Earnings: Investors Should Focus on This Instead

Group 1: Company Overview - Hershey is primarily known for its chocolates but operates as a snack maker, expanding into salty snacks like pretzels and popcorn [2] - The company has recently acquired LesserEvil, which produces healthier snack options, to enhance its salty snack portfolio [2] Group 2: Current Challenges - Hershey faces significant challenges due to a sharp rise in cocoa prices, which affects its chocolate confections [3][4] - The company is expected to see a mid-30% decline in adjusted earnings for 2025, following a slight decrease in 2024 earnings [4] Group 3: Sales and Revenue Outlook - Despite the earnings decline, Hershey projects a sales increase of at least 2% in 2025, supported by the addition of LesserEvil [5] - The company's food business continues to grow, with revenues being more stable than earnings over time [6] Group 4: Market Dynamics - Higher cocoa prices are expected to eventually lead to lower prices in the commodity market, suggesting that current challenges may be temporary [7] - Chocolate remains an affordable luxury for consumers, allowing Hershey to gradually implement price increases [8] Group 5: Long-term Perspective - A poor earnings year does not reflect negatively on Hershey as a company, which is facing typical short-term headwinds [9] - Monitoring sales trends is crucial, as resilient sales could present a buying opportunity for long-term investors, especially with a historically high dividend yield of 3.3% [10]