The Hershey Company
HSY · NYSE
Next quarter
Expected to report Feb 4, 2027 — estimated from last year’s reporting date.
Consensus is $2.01 EPS for Dec 2026 across 7 estimates, ranging $1.75 to $2.13.
HSY Sep 2026
- 24.53%
- $2.12
- $2.64
- —
- $3.28B
Reported results
- $3.28B
- 46.13%
- $817.65M
- 24.96%
- $580.81M
Highlights
- Adjusted EPS: $2.64 beat the $2.12 consensus by 24.5% and more than doubled year over year; reported diluted EPS was $2.88 versus $1.36.
- Sales and demand: Revenue rose 3.0% year over year to $3.28 billion, but organic constant-currency sales grew just 0.8% as 11 points of price realization were largely offset by a 10-point volume/mix decline.
- Margin recovery: Adjusted gross margin increased 1,090 basis points to 42.7% and adjusted operating margin rose 970 basis points to 23.0%; reported margins also benefited from $113.4 million of commodity-derivative mark-to-market gains.
- Confectionery pricing: North America Confectionery sales grew 1.6% to $2.66 billion on 13 points of price, while volume fell 11 points; U.S. candy, mint and gum takeaway rose 0.8% and share declined.
- Salty Snacks: Sales rose 22.3% to $392.7 million, including about 20 points from LesserEvil, while organic constant-currency sales grew 2.3%; segment income fell 17.9% to $47.4 million.
- International: Sales declined 7.5% to $226.4 million and organic constant-currency sales fell 9.7%, with a 14-point volume decline; the segment loss widened to $30.0 million.
- Updated outlook: Hershey raised 2026 reported sales growth guidance to about 5% from 4.5%–5%, lowered organic sales growth to about 3% from 3%–3.5%, and raised adjusted EPS growth to 36%–38.5% from 32.5%–35%.
- Cash generation: Nine-month operating cash flow was $1.64 billion, up from $1.35 billion; capital spending was $305 million and cash dividends paid were $859 million.
Analysis
Hershey delivered a sharp earnings rebound, with adjusted EPS of $2.64 beating the $2.12 consensus by 24.5% and rising 103.1% year over year. Revenue increased 3.0% to $3.28 billion, while reported net income more than doubled to $580.8 million. Against Q2 FY2026, revenue advanced from $2.79 billion, operating income from $642.6 million and net income from $457.7 million. The earnings improvement reflected a pronounced recovery in margins: adjusted gross margin reached 42.7%, up 1,090 basis points year over year, and adjusted operating margin was 23.0%, up 970 basis points.
The growth mix remains challenging. Organic constant-currency sales increased only 0.8% as roughly 11 points of pricing were offset by a 10-point volume/mix decline, including elasticity in confectionery and International. Reported results also benefited from commodity-derivative mark-to-market gains, while price realization, lower commodity costs, productivity savings and tariff refunds supported underlying adjusted margins. Segment performance diverged: confectionery profits surged on pricing and cost relief, salty-snack sales benefited from LesserEvil but profitability weakened, and International losses deepened. Hershey’s updated outlook reflects this balance: it lifted reported sales and adjusted EPS growth expectations, but trimmed its organic sales growth forecast to about 3%.
Pricing and margin recovery
Revenue grew 3.0% year over year to $3.28 billion, with foreign exchange adding 0.1 points and the LesserEvil acquisition contributing 2.1 points. Organic constant-currency sales rose 0.8%: approximately 11 points of price realization were offset by a 10-point volume/mix decline. Sequentially, revenue was up from $2.79 billion in Q2, while operating income rose to $817.7 million from $642.6 million and net income to $580.8 million from $457.7 million.
Reported gross margin expanded to 46.1% from 32.6%, and reported operating margin to 25.0% from 13.7%. These reported measures include a $113.4 million pre-tax commodity-derivative mark-to-market gain; adjusted gross and operating margins, which exclude such gains, were 42.7% and 23.0%, respectively. Pricing, productivity, tariff refunds and lower net commodity costs more than offset weaker volume and higher freight and logistics costs. SM&A expense increased 15.4%, including a 17.1% increase in advertising and consumer marketing and higher technology and capability investment.
North America Confectionery
- Sales and mix: Segment sales increased 1.6% to $2.66 billion. About 13 points of price realization were offset by an 11-point volume decline, reflecting elasticity and shipment variability.
- Profitability: Segment income rose 66.2% to $949.7 million and margin expanded 1,400 basis points to 35.8%. Pricing, lower commodity costs, tariff refunds and productivity savings outweighed lower volume and greater marketing investment.
- Retail trends: U.S. candy, mint and gum takeaway rose 0.8% in the 12 weeks ended September 27, against a prior-year comparison that included a significant Reese innovation launch. Hershey’s category share declined year over year.
Salty Snacks growth and costs
- Acquisition contribution: Sales grew 22.3% to $392.7 million, with LesserEvil accounting for about 20 percentage points. Organic constant-currency sales increased 2.3%, as volume rose about 1 point and pricing added about 1 point.
- Underlying demand: U.S. salty-snack takeaway, excluding LesserEvil, increased 4.0% and the company gained share. Organic sales trailed takeaway partly because Hershey intentionally reduced private-label production.
- Margin pressure: Segment income fell 17.9% to $47.4 million and margin contracted 590 basis points to 12.1%, pressured by freight, logistics and manufacturing costs, higher net commodity costs and increased consumer marketing.
International weakness
International sales fell 7.5% to $226.4 million; on an organic constant-currency basis they declined 9.7%. Strategic pricing added about 4 points, but volume fell about 14 points amid price elasticity, shipment timing and planned portfolio rationalization in select markets. Currency provided a 2.2-point reported-sales benefit. Segment loss widened to $30.0 million from $13.6 million a year earlier, and margin fell to negative 13.3% from negative 5.6%, as lower volume and higher input and manufacturing costs outweighed pricing, productivity savings and favorable mix.
Revised 2026 outlook
- Sales: Reported net sales growth guidance is now about 5%, versus 4.5%–5% previously; organic net sales growth is about 3%, down from 3%–3.5%. Reported sales growth includes an approximately 200-basis-point benefit from the LesserEvil acquisition.
- Earnings: Reported EPS growth guidance increased to 84%–90% from 82%–89%; adjusted EPS growth guidance rose to 36%–38.5% from 32.5%–35%. The adjusted outlook includes approximately $0.22 per share from Q3 tariff refunds and $0.03 from Q2, but excludes potential future refunds.
- Other planning assumptions: Hershey expects an approximately 25% effective tax rate, about $200 million of interest expense, $450 million of capital expenditures and approximately $100 million of savings from its Agility & Automation Initiative.
Cash flow and spending
- Operating cash flow: Cash from operations was $1.64 billion for the first nine months, compared with $1.35 billion a year earlier. Working-capital items consumed $428.7 million, versus $148.4 million in the prior-year period.
- Investment and returns: Capital additions, including software, were $305.0 million for the nine months; the company expects full-year capital expenditures of $425 million–$475 million. Dividends paid totaled $859.2 million and share repurchases used $439.4 million.
- Liquidity: Cash was $676.7 million at September 27, down $249.2 million from year-end 2025. Short- and long-term debt totaled about $5.1 billion.
