Summary
- The Hershey Company is the leading confectionery maker in the United States, but quite unsuccessful outside of North America.
- Nonetheless, the core business remains a rock star. In light of its international struggles, it has branched into the snack foods business.
- We are bullish on Hershey's roadmap, and find the current price of the stock to be attractive despite nearing 52-week highs.
The Hershey Company (HSY) is one of the most recognizable food brands in the United States. The company is a dominant player in the confectionery industry with a handful of beloved product brands. The confectionery industry is also a lucrative business, and Hershey is a cash flow machine because of it. Despite these positives, we need to broaden our view when analyzing Hershey as a long-term investment. There are some potential headwinds for long-term investors. The company's prominence in the US flips to weakness in international markets. The company has also taken on debt over the years. Despite some of these negatives, we remain bullish on Hershey as a consistent dividend growth stock that will provide modest growth over the long term. If the valuation is right, Hershey can still be a sweet addition to any long-term portfolio.
The Hershey Company has been in business since 1894, and is named for the town in which it was founded. The company today is one of the dominant confectionery companies in the market, with a top share in the US of 30.2%. The company has also diversified itself in recent years, by using M&A to get into the snack foods business. Approximately 88% of the company's $7.7 billion in annual revenues are generated from North America.
