The Hershey Company

HSY · NYSE · USD

Does falling cocoa cost plus salty-snack growth rebuild Hershey's margins fast enough to offset lost chocolate volume and market share?

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Pricing holds better than planned

    Prices went up to cover cocoa and shoppers bought more than planned, so this year's plan pairs sales growth with a large earnings rebound.

  • Cocoa cost relief

    Cocoa costs are hedged above today's market but falling, which should let gross margin rebuild over the next few years without another round of price increases.

  • Salty snacks growth

    Salty snacks and added seasonal events give Hershey growth beyond chocolate, and both are winning shelf space from a flat category.

  • Cash generation

    Cash flow covers the dividend and buybacks while debt is paid down, which funds brand investment without new borrowing.

Bear case

  • Chocolate volume and share

    Higher prices have cost chocolate volume, and Hershey is losing share in its largest category even as competitors keep the pressure on.

  • Rivals add innovation faster

    Competitors are bringing innovation and in-store activity faster than expected, and price gaps to the largest rival have widened in some channels.

  • Snack supply and freight

    Freight, logistics and capacity problems in salty snacks are taking some of the margin recovery that cocoa relief was expected to deliver.

  • Policy and customer concentration

    Candy restrictions in food assistance programs and wider use of weight-loss drugs could soften demand, and a single distributor accounts for a large share of sales.

Bull and bear points

Growth & Execution

In short: Salty snacks and seasonal programs are growing, while confection volume and market share are slipping.

Bull · 2

  • Full-year guidance firms from vague upside to a real 2026 plan

    A quarter ago management pointed only to possible EPS upside above its long-term algorithm; it now guides to 4% to 5% net sales growth and meaningful earnings recovery.

    Tone shiftQ3 FY2025 → Q4 FY2025

  • Salty snacks grow 23% and take shelf space in a flat category

    SkinnyPop, Dot's and Pirate's Booty are winning space because retailers reward velocity, giving Hershey a second growth line beside chocolate.

    Q4 FY2025 call
Bear · 2

  • Confection share falls as competitors add innovation and displays

    North America confectionery still grew 4.2%, but losing share in the largest segment means the pricing taken for cocoa is buying less volume.

    Q1 FY2026 call

  • Second half must lap last year's REESE'S Oreo launch

    That launch was the category's top innovation driver last year, so the back half needs the new premium Hershey line and tentpole events to replace a hard comparison.

    Q3 FY2025 call

Profitability & Financial Strength

In short: Gross margin is recovering from cocoa and tariff costs, though some cocoa inflation is still unrecovered.

Bull · 2

  • Gross margin jumps as cocoa hedges and pricing flow through

    Gross margin reached 45.3% in the second quarter against 30.5% a year earlier, the clearest sign that cost recovery is now showing up in reported results.

    Filed financials

  • Cocoa outlook shifts from inflation to visible deflation

    Management previously modeled cocoa inflation for 2026; it now says it has good visibility into deflation next year even with futures near current levels.

    Tone shiftQ3 FY2025 → Q2 FY2026
Bear · 2

  • 2025 pricing does not fully cover 2026 cocoa cost inflation

    Management said the increases leave part of the cocoa cost unrecovered, so margin repair still depends on deflation arriving on the timeline they expect.

    Q4 FY2025 call

  • Salty snack freight and logistics trim the full-year margin gain

    The gross margin outlook slipped to just below the roughly 400 basis point gain previously indicated, because salty snacks are still buying spot freight to hold service.

    Q2 FY2026 call

Market Position

In short: Hershey leads US chocolate and seasons, but rivals are adding innovation and displays faster.

Bull · 2

  • Season execution turns from soft Halloween to share gains

    After a disappointing 2025 Halloween, management says it gained share across seasons in the first half of 2026 on better retail execution.

    Tone shiftQ3 FY2025 → Q2 FY2026

  • Most units priced under $4 keeps demand inelastic

    Keeping the bulk of the portfolio at accessible price points has held elasticities at or better than planned, which supports taking the price needed to recover cocoa.

    Q4 FY2025 call
Bear · 2

  • Category described as rational, then share starts slipping

    Management called the category rational with no concerns a quarter earlier; it now ties a confection share decline to rivals' innovation and merchandising.

    Tone shiftQ3 FY2025 → Q1 FY2026

  • SNAP candy restrictions reach twelve states across the year

    Candy is excluded from food assistance purchases in states adopting waivers, and management plans for that headwind to grow as more states implement through 2026.

    Q4 FY2025 call