Consumer staples stocks have lagged the market by a wide margin over the past year. Hershey’s shares have fallen along with the sector. Margins are getting compressed so rapidly across the sector along as commodity inflation increases. Hershey’s stock price has dropped by 20 percent as the sector has been out of favor and Hershey’s adjusted gross margin narrowed significantly 44.9%, reflecting packaging and freight cost inflation.
Hershey posted a profit of $1.41 per share for Q1, 1 cent above analysts’ average estimate, according to Thomson Reuters I/B/E/S. Revenue rose 4.9 percent to $1.97 billion, beating the average analyst estimate of $1.94 billion. The firm is the dominant force in the U.S. chocolate market with a 45 percent market share. Hershey plans to extract $150 million-$175 million in costs to use for brand spending. The firm’s top five brands generated more than $5 billion in annual revenue. These include Hershey, Reese, Kit Kat, Kisses, and Ice Breakers. The firm’s brand is ranked number two.
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The Board of Directors of The Hershey Company announced quarterly dividends of $0.656 on the Common Stock. The dividends were declared on May 2, 2018 and are payable June 15, 2018 to stockholders of record May 25, 2018. It is the 354th consecutive regular dividend on the Common Stock. The stock is a premier firm that offers a solid 2.8 percent yield and trades at only 2.6 times sales, a seven year low. The stock has been added to the Top 100 list as the stock price has declined by over 20 percent in the past six months, now offering compelling value for a long-term investor.