What Happened?
Shares of chocolate company Hershey (NYSE:HSY) jumped 3.2% in the morning session after the company reported second-quarter earnings and revenue that significantly surpassed Wall Street expectations. The chocolate maker posted revenue of $2.61 billion, a 26% increase from the prior year, and adjusted earnings of $1.21 per share, both of which significantly surpassed analyst forecasts. This strong performance was attributed to solid sales growth and market-share gains in its U.S. confection and salty-snacks business units. The robust results were also aided by favorable comparisons against the previous year, which was impacted by planned inventory reductions related to an Enterprise Resource Planning (ERP) system implementation. Investors appeared to focus on the impressive quarterly beat, overlooking the company's decision to lower its full-year earnings outlook amid ongoing tariff expenses.
After the initial pop the shares cooled down to $190.55, up 2.2% from previous close.
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What Is The Market Telling Us
Hershey’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 4% on the news that new economic data showed unexpected strength in U.S. consumer spending, boosting investor confidence in consumer-focused stocks. The broader market rallied after the U.S. Census Bureau reported that retail sales rose more than expected in June, a sign of a resilient consumer. This encouraging economic picture is particularly beneficial for consumer staples companies like Hershey, as it suggests shoppers still have the capacity and willingness to spend on everyday items and treats. The positive data helped ease investor fears about a potential recession, lifting stocks across the consumer sector.
The move provided a boost for Hershey, which has faced headwinds from surging cocoa prices and has seen its earnings per share forecast for 2025 contract., Investors appeared to set aside those concerns for the day, focusing instead on the favorable macroeconomic backdrop for consumer demand.
Also, the second quarter (2025) earnings season got off to a strong start. Quarterly earnings reports released during the week exceeded Wall Street's expectations, fueling investor confidence. Around 50 S&P 500 components reported, with 88% of those exceeding analysts' expectations, FactSet data revealed.
Hershey is up 12.9% since the beginning of the year, and at $190.55 per share, it is trading close to its 52-week high of $203.25 from September 2024. Investors who bought $1,000 worth of Hershey’s shares 5 years ago would now be looking at an investment worth $1,312.
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