The Hershey Co

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HSY : NYSE : Consumer Goods
$95.85 | %
Today's Range: 94.77 - 97.72
Avg. Daily Volume: 1,886,900
09/23/16 - 4:02 PM ET

Financial Analysis


HERSHEY CO's gross profit margin for the second quarter of its fiscal year 2016 has increased when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. HERSHEY CO has very weak liquidity. Currently, the Quick Ratio is 0.27 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity decreased from the same period a year ago, despite already having very weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 36.71% 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 FY16 Q2 FY15
Net Sales ($mil)1637.671578.83
EBITDA ($mil)422.2345.07
EBIT ($mil)325.33286.92
Net Income ($mil)145.96-99.94


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)250.19401.97
Total Assets ($mil)5567.385449.33
Total Debt ($mil)3068.382413.83
Equity ($mil)727.951150.26


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin53.6350.36
EBITDA Margin25.7821.85
Operating Margin19.8718.17
Sales Turnover1.321.37
Return on Assets13.3610.47
Return on Equity102.1949.64
Debt Q2 FY16 Q2 FY15
Current Ratio0.680.99
Debt/Capital0.810.68
Interest Expense23.023.26
Interest Coverage14.1512.34


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)212.8219.35
Div / share0.580.54
EPS0.68-0.47
Book value / share3.425.24
Institutional Own % n/a n/a
Avg Daily Volume1901871.01294071.0

Valuation


BUY. HERSHEY CO's P/E ratio indicates a premium compared to an average of 25.19 for the Food Products industry and a premium compared to the S&P 500 average of 24.84. For additional comparison, its price-to-book ratio of 28.07 indicates a significant premium versus the S&P 500 average of 2.78 and a significant premium versus the industry average of 6.19. 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 28.07 Peers 25.19   HSY 19.05 Peers 18.14

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

HSY is trading at a premium to its peers.

 

Average. 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 valuation on par 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 20.92 Peers 21.26   HSY 0.34 Peers 1.17

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 28.07 Peers 6.19   HSY 34.64 Peers 79.03

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 2.78 Peers 1.91   HSY -2.03 Peers 0.32

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.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

HSY significantly trails its peers on the basis of sales growth

 

 

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