Hershey has continued to consolidate this year as part of a strategy to close underperforming plants and concentrate on its most profitable brands.

BY THE NUMBERS: Analysts polled by Thomson Reuters on average expect Hershey to report it earned 67 cents per share in the quarter that ended Oct. 4 on sales of $1.54 billion. In the same period a year earlier, it reported earnings of 64 cents, excluding one-time items, on revenue of $1.49 billion.

ANALYST TAKE: Some analysts see Hershey's higher-than-average price-to-earnings ratio compared to other packaged-food companies as being driven by expectations of a buyout by Cadbury or a larger company, such as Nestle. However, many analysts see that as highly unlikely, given the position of Hershey's majority shareholder, The Hershey Trust Co., against selling its controlling stake.

Sanford C. Bernstein & Co. analyst Alexia Howard of said she sees headwinds for Hershey, including markedly higher promotional prices at Halloween and the winter holidays, which could hurt buying. The discontinuation of Starbucks chocolate and Cacao reserve this month could hurt sales through the third quarter of 2010.

Edward Jones analyst Jack Russo said Hershey has a favorable long-term outlook because it has a portfolio of well-known brands such as Hershey's and Reese's, penetration of faster-growing retail channels and a strong product pipeline that should help it gain market share. In addition, a tough economy is prompting customers to trade down from premium chocolate to Hershey's traditional, more mass-market products, he said.

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