HERSHEY CO/THE (HSY) Stock Fundamental Analysis
NYSE:HSY - New York Stock Exchange, Inc. - US4278661081 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to HSY. HSY was compared to 91 industry peers in the Food Products industry. While HSY belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. HSY has a expensive valuation and it also scores bad on growth.
1. Profitability
1.1 Basic Checks
In the past year HSY was profitable.
In the past year HSY had a positive cash flow from operations.
Each year in the past 5 years HSY has been profitable.
HSY had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
The Return On Assets of HSY (14.05%) is better than 92.94% of its industry peers.
HSY's Return On Equity of 42.18% is amongst the best of the industry. HSY outperforms 98.82% of its industry peers.
The Return On Invested Capital of HSY (23.06%) is better than 97.65% of its industry peers.
HSY had an Average Return On Invested Capital over the past 3 years of 23.99%. This is significantly above the industry average of 9.02%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.05% | ||
| ROE | 42.18% | ||
| ROIC | 23.06% |
ROA(3y)15.94%
ROA(5y)15.2%
ROE(3y)47.46%
ROE(5y)50.64%
ROIC(3y)23.99%
ROIC(5y)22.85%
1.3 Margins
The Profit Margin of HSY (16.17%) is better than 95.29% of its industry peers.
HSY's Profit Margin has improved in the last couple of years.
HSY has a better Operating Margin (23.04%) than 97.65% of its industry peers.
HSY's Operating Margin has improved in the last couple of years.
HSY has a better Gross Margin (44.46%) than 96.47% of its industry peers.
HSY's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 23.04% | ||
| PM (TTM) | 16.17% | ||
| GM | 44.46% |
OM growth 3Y4.4%
OM growth 5Y4.06%
PM growth 3Y6.38%
PM growth 5Y6.61%
GM growth 3Y1.55%
GM growth 5Y0.85%
2. Health
2.1 Basic Checks
HSY has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, HSY has less shares outstanding
HSY has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, HSY has an improved debt to assets ratio.
2.2 Solvency
HSY has an Altman-Z score of 4.45. This indicates that HSY is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.45, HSY belongs to the best of the industry, outperforming 82.35% of the companies in the same industry.
HSY has a debt to FCF ratio of 3.20. This is a good value and a sign of high solvency as HSY would need 3.20 years to pay back of all of its debts.
The Debt to FCF ratio of HSY (3.20) is better than 71.76% of its industry peers.
HSY has a Debt/Equity ratio of 1.04. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.04, HSY is doing worse than 78.82% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.04 | ||
| Debt/FCF | 3.2 | ||
| Altman-Z | 4.45 |
ROIC/WACC2.75
WACC8.38%
2.3 Liquidity
HSY has a Current Ratio of 0.85. This is a bad value and indicates that HSY is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.85, HSY is not doing good in the industry: 78.82% of the companies in the same industry are doing better.
HSY has a Quick Ratio of 0.85. This is a bad value and indicates that HSY is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of HSY (0.54) is worse than 75.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.85 | ||
| Quick Ratio | 0.54 |
3. Growth
3.1 Past
HSY shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -2.29%.
Measured over the past years, HSY shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.11% on average per year.
HSY shows a small growth in Revenue. In the last year, the Revenue has grown by 0.33%.
HSY shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.00% yearly.
EPS 1Y (TTM)-2.29%
EPS 3Y9.28%
EPS 5Y10.11%
EPS Q2Q%33.17%
Revenue 1Y (TTM)0.33%
Revenue growth 3Y7.68%
Revenue growth 5Y7%
Sales Q2Q%8.67%
3.2 Future
Based on estimates for the next years, HSY will show a small growth in Earnings Per Share. The EPS will grow by 5.21% on average per year.
The Revenue is expected to grow by 3.71% on average over the next years.
EPS Next Y-29.89%
EPS Next 2Y-14.07%
EPS Next 3Y-5.81%
EPS Next 5Y5.21%
Revenue Next Year2.19%
Revenue Next 2Y2.51%
Revenue Next 3Y2.63%
Revenue Next 5Y3.71%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 17.73, HSY is valued on the expensive side.
Compared to the rest of the industry, the Price/Earnings ratio of HSY is on the same level as its industry peers.
HSY's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 30.30.
A Price/Forward Earnings ratio of 25.29 indicates a quite expensive valuation of HSY.
The rest of the industry has a similar Price/Forward Earnings ratio as HSY.
When comparing the Price/Forward Earnings ratio of HSY to the average of the S&P500 Index (23.06), we can say HSY is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.73 | ||
| Fwd PE | 25.29 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HSY is on the same level as its industry peers.
HSY's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.39 | ||
| EV/EBITDA | 12.5 |
4.3 Compensation for Growth
HSY has an outstanding profitability rating, which may justify a higher PE ratio.
HSY's earnings are expected to decrease with -5.81% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)1.75
EPS Next 2Y-14.07%
EPS Next 3Y-5.81%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.41%, HSY has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.94, HSY pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.29, HSY pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.41% |
5.2 History
The dividend of HSY is nicely growing with an annual growth rate of 10.18%!
HSY has been paying a dividend for at least 10 years, so it has a reliable track record.
HSY has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)10.18%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
HSY pays out 59.32% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of HSY is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP59.32%
EPS Next 2Y-14.07%
EPS Next 3Y-5.81%
166.1
+2.2 (+1.34%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryFood Products
Earnings (Last)
Earnings (Next)
Inst Owners82.01%
Inst Owner Change-2.09%
Ins Owners0.14%
Ins Owner Change0.03%
Market Cap33.71B
Analysts53.94
Price Target176.21 (6.09%)
Short Float %4.64%
Short Ratio2.82
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.41% |
Yearly Dividend4.34
Dividend Growth(5Y)10.18%
DP59.32%
Div Incr Years15
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-10.84%
Min EPS beat(2)-12.15%
Max EPS beat(2)-9.53%
EPS beat(4)2
Avg EPS beat(4)-2.28%
Min EPS beat(4)-12.15%
Max EPS beat(4)10.1%
EPS beat(8)6
Avg EPS beat(8)2.88%
EPS beat(12)10
Avg EPS beat(12)4.47%
EPS beat(16)14
Avg EPS beat(16)4.27%
Revenue beat(2)0
Avg Revenue beat(2)-7.42%
Min Revenue beat(2)-10.97%
Max Revenue beat(2)-3.88%
Revenue beat(4)1
Avg Revenue beat(4)-3.52%
Min Revenue beat(4)-10.97%
Max Revenue beat(4)3.49%
Revenue beat(8)4
Avg Revenue beat(8)-1.28%
Revenue beat(12)8
Avg Revenue beat(12)1.17%
Revenue beat(16)12
Avg Revenue beat(16)1.99%
PT rev (1m)-5.84%
PT rev (3m)-12.91%
EPS NQ rev (1m)-0.38%
EPS NQ rev (3m)-4.31%
EPS NY rev (1m)-19.33%
EPS NY rev (3m)-26.1%
Revenue NQ rev (1m)-0.21%
Revenue NQ rev (3m)-1.21%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)-1.24%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.73 | ||
| Fwd PE | 25.29 | ||
| P/S | 3.07 | ||
| P/FCF | 20.39 | ||
| P/OCF | 14.36 | ||
| P/B | 8.02 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.5 |
EPS(TTM)9.37
EY5.64%
EPS(NY)6.57
Fwd EY3.95%
FCF(TTM)8.15
FCFY4.91%
OCF(TTM)11.57
OCFY6.96%
SpS54.06
BVpS20.72
TBVpS-3.33
PEG (NY)N/A
PEG (5Y)1.75
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.05% | ||
| ROE | 42.18% | ||
| ROCE | 30% | ||
| ROIC | 23.06% | ||
| ROICexc | 24.63% | ||
| ROICexgc | 53.75% | ||
| OM | 23.04% | ||
| PM (TTM) | 16.17% | ||
| GM | 44.46% | ||
| FCFM | 15.07% |
ROA(3y)15.94%
ROA(5y)15.2%
ROE(3y)47.46%
ROE(5y)50.64%
ROIC(3y)23.99%
ROIC(5y)22.85%
ROICexc(3y)25.42%
ROICexc(5y)24.68%
ROICexgc(3y)56.48%
ROICexgc(5y)55.79%
ROCE(3y)30.24%
ROCE(5y)28.38%
ROICexcg growth 3Y0.64%
ROICexcg growth 5Y-5.66%
ROICexc growth 3Y8.1%
ROICexc growth 5Y0.23%
OM growth 3Y4.4%
OM growth 5Y4.06%
PM growth 3Y6.38%
PM growth 5Y6.61%
GM growth 3Y1.55%
GM growth 5Y0.85%
F-Score5
Asset Turnover0.87
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.04 | ||
| Debt/FCF | 3.2 | ||
| Debt/EBITDA | 1.47 | ||
| Cap/Depr | 154.84% | ||
| Cap/Sales | 6.32% | ||
| Interest Coverage | 14.21 | ||
| Cash Conversion | 78.88% | ||
| Profit Quality | 93.24% | ||
| Current Ratio | 0.85 | ||
| Quick Ratio | 0.54 | ||
| Altman-Z | 4.45 |
F-Score5
WACC8.38%
ROIC/WACC2.75
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-2.29%
EPS 3Y9.28%
EPS 5Y10.11%
EPS Q2Q%33.17%
EPS Next Y-29.89%
EPS Next 2Y-14.07%
EPS Next 3Y-5.81%
EPS Next 5Y5.21%
Revenue 1Y (TTM)0.33%
Revenue growth 3Y7.68%
Revenue growth 5Y7%
Sales Q2Q%8.67%
Revenue Next Year2.19%
Revenue Next 2Y2.51%
Revenue Next 3Y2.63%
Revenue Next 5Y3.71%
EBIT growth 1Y-3.82%
EBIT growth 3Y12.42%
EBIT growth 5Y11.34%
EBIT Next Year9.9%
EBIT Next 3Y7.54%
EBIT Next 5Y6.94%
FCF growth 1Y1.76%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y0.62%
OCF growth 3YN/A
OCF growth 5YN/A