The Hershey Co

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HSY : NYSE : Consumer Goods
$108.87 -0.54 | -0.49%
Today's Range: 107.73 - 109.24
Avg. Daily Volume: 1043000.0
09/20/17 - 11:31 AM ET

Financial Analysis


HERSHEY CO's gross profit margin for the second quarter of its fiscal year 2017 has decreased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. HERSHEY CO has very weak liquidity. Currently, the Quick Ratio is 0.36 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has increased by 17.49% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY17 Q2 FY16
Net Sales ($mil)1662.991637.67
EBITDA ($mil)396.93422.2
EBIT ($mil)329.81325.33
Net Income ($mil)203.5145.96


Balance Sheet Q2 FY17 Q2 FY16
Cash & Equiv. ($mil)214.06250.19
Total Assets ($mil)5380.235567.38
Total Debt ($mil)2971.813068.38
Equity ($mil)855.31727.95


Profitability Q2 FY17 Q2 FY16
Gross Profit Margin50.2853.63
EBITDA Margin23.8625.78
Operating Margin19.8319.87
Sales Turnover1.41.32
Return on Assets12.513.36
Return on Equity78.66102.19
Debt Q2 FY17 Q2 FY16
Current Ratio1.10.68
Debt/Capital0.780.81
Interest Expense25.323.0
Interest Coverage13.0414.15


Share Data Q2 FY17 Q2 FY16
Shares outstanding (mil)212.42212.8
Div / share0.620.58
EPS0.950.68
Book value / share4.033.42
Institutional Own % n/a n/a
Avg Daily Volume1056392.01017372.0

Valuation


BUY. HERSHEY CO's P/E ratio indicates a premium compared to an average of 25.81 for the Food Products industry and a premium compared to the S&P 500 average of 24.88. For additional comparison, its price-to-book ratio of 27.15 indicates a significant premium versus the S&P 500 average of 3.10 and a significant premium versus the industry average of 4.59. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, HERSHEY CO proves to trade at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
HSY 34.82 Peers 25.81   HSY 23.85 Peers 20.31

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

HSY is trading at a significant premium to its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

HSY is trading at a premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
HSY 21.00 Peers 22.78   HSY 0.79 Peers 1.07

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

HSY is trading at a valuation on par with its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

HSY trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
HSY 27.15 Peers 4.59   HSY -8.19 Peers 31.39

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

HSY is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, HSY is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
HSY 3.09 Peers 2.14   HSY 2.45 Peers 0.35

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

HSY is trading at a significant premium to its industry.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

HSY has a sales growth rate that significantly exceeds its peers.

 

 

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