Hershey Company (The) (HSY) Earnings & Analysis

Latest quarter

Hershey reported Q2 FY2026 revenue of $2.8 billion, above the $2.6 billion consensus and up from $2.6 billion a year earlier. Adjusted earnings per share, as counted by the consensus, were $1.90, above the $1.45 estimate.

The company reported diluted earnings per share of $2.26, compared with $0.31 a year earlier. Gross margin rose to 45.3% from 30.5%, while operating margin increased to 23.1% from 7.37%. Hershey generated $329.5 million in free cash flow, compared with −$46.5 million a year earlier.

On the call, CFO Steve Voskuil said retail inventory replenishment was largely completed in Q2 after inventory levels ran low during the transition to new pack prices. He also said some shipments for third-quarter merchandising occurred in Q2, slightly ahead of expectations.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q2 call, CFO Steve Voskuil said first-half U.S. confectionery retail consumption understated demand because of growth in channels not captured by the measurement and the timing of Easter shipments. He said the gap between consumption and shipments should narrow in the second half after retailers replenished inventory.

CEO Kirk Tanner said Hershey faced tougher comparisons in the second half but had merchandising and innovation plans, including Hershey creme bars, activity around a Hershey movie and Halloween programs. Voskuil said some third-quarter merchandising shipments moved into Q2 ahead of expectations, but an extra fourth-quarter shipping day would largely offset that timing effect.

Asked about Dot’s, Tanner said the business had experienced difficulty keeping up with demand, although he considered those growing pains largely behind it. He said Hershey had invested in automation and capacity, with additional capacity coming online in 2027. Voskuil said Salty Snacks operating margin came in below expectations as supply-chain challenges increased freight and logistics costs and limited throughput.

On international markets, Voskuil said demand in Brazil, the UK and India was ahead of plan, while conditions in Mexico remained challenging. He said higher cocoa costs were reaching the international business with a delay and that freight and logistics costs were also affecting margins. Voskuil added that optimization work would weigh on second-half international margins relative to the first half.

Tanner said the confectionery market was competitive and that Hershey was investing in innovation to support both margin and market share. He expected volume trends to improve over time as commodity inflation eased and consumers’ responses to pricing normalized.

Asked about cocoa, Voskuil said Hershey had visibility into deflation in 2027 but declined to be more specific at that point. He said the company would provide more detail closer to year-end.

Guidance

In its October outlook, Hershey projected approximately 5.00% net sales growth for FY2026, at the upper end of its previous range. The company projected approximately 3.00% organic net sales growth, at the lower end of its prior range.

Hershey also expected approximately $450.0 million in capital expenditures and a 25.0% reported and adjusted effective tax rate, replacing its previous ranges for both measures. The company raised its adjusted earnings-per-share growth outlook.