Latest Developments:
Hershey (HSY) reported Q3 2024 revenues of $2.98 billion, a 1.42% decline year-on-year, driven by weak performance in its salty snacks and international segments. Despite an operational improvement, the company has downgraded its full-year guidance, projecting flat sales and a 7.5% decline in EPS. Profit margins have been under pressure due to higher input costs, with cocoa and sugar prices remaining elevated.

Investment Case:
HSY faces multiple headwinds, including declining revenues, margin erosion from rising raw material and supply chain costs, and increased competition. While the company has outperformed peers in profitability, the current price suggests that the stock is slightly overvalued. Our valuation model indicates a potential downside of 9% based on flat revenue growth and margin pressures.

Valuation:
Using a DCF model with conservative assumptions, HSY’s implied share price is $161.09, indicating a potential downside of 9% from its current price of $177.87.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Interested parties may check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.