The Hershey story

What drives the business

• Hershey’s foundation is its North American chocolate business, led by Hershey’s, Reese’s and Kisses, with U.S. rights to Kit Kat and Rolo under licensing agreements with Société des Produits Nestlé SA.
• McLane Company accounted for approximately 27% of consolidated net sales in 2025 and serves as the primary distributor of Hershey products to Wal-Mart Stores.
• Expansion into popcorn and pretzels includes SkinnyPop, Dot’s and LesserEvil, whose acquisition in November 2025 added organic popcorn, puffed snacks and manufacturing capacity.
• In the quarter to June 2026, North America Confectionery generated $2,173.6 million in sales, compared with $387.8 million from North America Salty Snacks and $225.9 million from International.
• Pricing, lower commodity costs and productivity savings lifted North America Confectionery segment income 40.1% in the quarter to June 2026, with margin expanding 830 basis points to 32.5%.

What the price assumes

At $164.41, the reverse DCF implies free cash flow after stock pay grows 4.2% a year for ten years, using a 10.2% discount rate.

That compares with delivered growth of 9.4% a year over the last 10 years and the TenQ check’s 6.7% bar, which slows that record halfway toward 4%.

Hershey generated $2.2 billion of free cash flow over the last twelve months, alongside $69 million of stock-based pay, although revenue growth averaged 3.9% a year over the last three years.

Value HSY on your own assumptions

What could change the story

• Price increases are weighing on confectionery volumes, and Hershey’s U.S. candy, mint and gum market share declined over the period ended July 19, 2026 amid increased competitive innovation.
• Cocoa remains the most significant raw material for chocolate, with approximately 70% of global cocoa bean supply coming from West Africa, while commodity derivative revaluations can make reported profit recovery look stronger than adjusted results.
• Multipack and Dot’s execution challenges constrained salty snack growth in the quarter to June 2026, while higher logistics costs, promotional spending and unfavorable mix reduced segment margin to 16.1%.
• International recorded a $5.1 million loss in the quarter to June 2026 as higher raw material, manufacturing and advertising costs outweighed pricing and productivity benefits.
• Total debt of $5.2 billion against $791 million in cash and short-term investments accompanies failed TenQ liquidity and debt checks, while profit growth over the last twelve months was -2.7% despite the June 2026 earnings recovery.

What to watch next

• Hershey’s 2026 outlook calls for net sales growth of 4.5% to 5%, organic net sales growth of 3% to 3.5% and adjusted earnings per share growth of 32.5% to 35%.
• The next releases will show whether confectionery volumes stabilize as pricing supports margins, and whether salty snack supply improvements translate consumer demand into stronger organic sales.
• Adjusted gross margin and progress toward approximately $100 million of Advancing Agility & Automation Initiative savings will help distinguish operating improvement from commodity derivative movements.
• Capital expenditures against the 2026 guidance of approximately $425 million to $475 million, together with free cash flow and debt, will show how much cash remains after investment.

Sources

• Hershey's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The HSY stock report, for every figure and check