Key Takeaways:
- Brand Investment Shift: Hershey stock reflects a 20% increase in Hershey’s brand marketing spend, positioning Hershey stock for volume stability despite slower category growth.
- Cost Relief Tailwind: Hershey stock benefits from easing cocoa cost pressure and tariff removal, supporting margin recovery toward 19% across 2026 and 2027.
- Price Projection: Hershey stock could reach $230 by December 2027, supported by 1% revenue growth, normalized margins, and a stable 30x earnings multiple.
- Upside Math: From the $195 current price, Hershey stock implies 18% total upside, translating into a 9% annualized return over 2 years.
The Hershey Company (HSY) is a leading US confectionery and snack producer, competing at scale through iconic brands across chocolate, salty snacks, and pantry categories.
In January 2026, Hershey raised brand marketing spending by 20% while benefiting from easing cocoa costs and reduced tariff pressure.
Hershey generated about $11 billion in LTM revenue, reflecting pricing resilience and brand strength despite slowing packaged food volume growth.
Hershey stock delivered roughly $2 billion in operating income, supporting an 17% operating margin profile backed by scale efficiencies and disciplined cost control.
With a market capitalization near $40 billion and shares around $195, strong fundamentals contrast with a 30x valuation that frames expectations heading into 2027.
What the Model Says for HSY Stock
The model reflects Hershey’s stable brand position, consistent cash generation, and disciplined capital returns within a mature packaged food market.
Using 0.8% revenue growth, 18.8% operating margins, and a 29.9x exit multiple, the model projects Hershey stock reaching $230.
That outcome implies a 17.9% total upside, equal to an 8.9% annual return over the next 1.9 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for HSY stock:
1. Revenue Growth: 0.8%
Hershey generated about $11 billion in LTM revenue, with growth slowing from 7% historically as pricing gains tapered and volumes faced consumer trade-down pressure.
Recent quarters show modest revenue growth from pricing, seasonality, and snack distribution, despite muted packaged food demand.
Mature US confectionery penetration and ingredient regulation limit growth, partially offset by innovation and international brand expansion.
A 0.8% revenue growth assumption balances pricing power with slow category growth and cautious consumer spending.
2. Operating Margins: 18.8%
Hershey stock’s operating margins peaked near 27% in 2024 before easing to about 17% LTM from cocoa costs and higher marketing spend.
Margin normalization reflects easing cocoa inflation, tariff relief, and disciplined cost control, while higher brand spending supports long-term volume stability.
Risks include renewed commodity volatility and reformulation costs, partially offset by scale advantages and mix improvement toward premium brands.
In line with analyst consensus projections, operating margins near 18.8% balance cost relief with sustained reinvestment without assuming peak-cycle profitability.
3. Exit P/E Multiple: 29.9x
Hershey stock has traded between roughly 23x and 29x earnings historically, reflecting its defensive demand profile and consistent cash generation.
Current valuation reflects investor caution after earnings pressure, despite stable dividends and improving cost visibility into 2026.
The multiple assumes earnings stability holds and brand strength remains intact, without requiring sentiment-driven re-rating.
A 29.9x exit multiple reflects balanced expectations for steady growth, durable margins, and restrained investor sentiment.
What Happens If Things Go Better or Worse?
Hershey outcomes depend on pricing power, cocoa costs, and execution discipline across confectionery and snacks through 2029.
- Low Case: If demand stays soft and costs limit flexibility, revenue grows around 2.8% → 2.5% annualized return.
- Mid Case: With core brands performing steadily, revenue growth near 3.2% → 7.4% annualized return.
- High Case: If pricing holds and costs ease further, revenue reaches about 3.5% → 11.7% annualized return.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
