Will Hershey's Halloween Week Earnings Trick or Treat Investors?
Key Points
Hershey raised its 2026 full-year guidance last quarter in anticipation of a strong second half.
The stock has not fared as well, falling more than 12% in the past year.
Risk factors such as El Niño's effect on cocoa harvests and tariffs are still in play.
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The Hershey Company (NYSE: HSY) is due to release its third-quarter earnings just before Halloween on Oct. 29. This quarter will include a large part of Hershey's Halloween shipments, so the report will likely reflect how people are feeling about the prices of this trick-or-treat season.
The candy and snack company's second quarter was strong. Hershey's net sales grew 6.6% to $2.79 billion, and adjusted earnings per share (EPS) climbed 57% to $1.90. Net income grew a whopping 629% from this quarter last year. The growth is largely attributed to price increases and lower cocoa costs, though volume did fall about 8%.
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The company's management is well aware that consumers, particularly in North America, are very value-focused and choosy with their discretionary purchases. Cocoa has fallen well below its late 2024 highs, but the reduced cocoa costs haven't necessarily translated into lower candy prices on retail shelves.
Image source: Getty Images.
Hershey raised its 2026 adjusted EPS outlook to $8.36 to $8.52, and Q3 EPS growth could be quite strong. Although El Niño may affect cocoa prices and harvests, if Hershey can stabilize its volumes while delicately balancing prices among sensitive consumers, I'd expect this Halloween season to be more of a treat than a trick for investors. However, if volumes continue to decline, tariffs inflict further pain, or El Niño wreaks havoc, the stock may leave a bitter taste in shareholders' mouths for a while longer.
Shares of Hershey have fallen about 12% in the past year, and its forward price-to-earnings ratio is currently around 17. The stock looks fairly priced, and I'm cautiously bullish even with the larger macroeconomic risks at play.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hershey. The Motley Fool has a disclosure policy.
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